1. A project has a first cost of $14,000, uniform annual benefits of $2400, and
ID: 2654701 • Letter: 1
Question
1. A project has a first cost of $14,000, uniform annual benefits of $2400, and a salvage value of $3000 at the end of its 10-year useful life. What is the net present worth at an interest rate of 12%?
$560
$526.45
$500.24
$500.45
2. The project in question 1 is acceptable?
3. If you are comparing four alternatives with all having a PW > 0, your conclusion will be that all alternative are not acceptable?
4. In question 3, the alternative with largest PW will be most feasible?
$560
$526.45
$500.24
$500.45
Explanation / Answer
1. A project has a first cost of $14,000, uniform annual benefits of $2400, and a salvage value of $3000 at the end of its 10-year useful life. What is the net present worth at an interest rate of 12%?
Net present worth = -14000 + 2400*PVIFA(12%,10) + 3000*PVIF(12%,10)
Net present worth = -14000 + 2400*5.65022+ 3000*0.32197
Net present worth = $ 526.45
Answer
B) $ 526.45
2. The project in question 1 is acceptable?
True
3. If you are comparing four alternatives with all having a PW > 0, your conclusion will be that all alternative are not acceptable?
False
4. In question 3, the alternative with largest PW will be most feasible?
True
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