2.1 5.10101 6.15202 947130 008241 An inline filter has an estimated life of 9 ye

Question

2.1 5.10101 6.15202 947130 008241 An inline filter has an estimated life of 9 years. By adding a purifier to the filter, savings of S300 in annual operating costs can be obtained. Annual interest on capital is 8 percent. Compute the maximum expenditure justifiable for the purifier. Use Present Worth, show all work a. $24 b. $33 c. $300 d. $1,875 CConsider the following cash flow diagram. i:12% What is the value of X if the present worth of the diagram is $400 and the interest rate is 12 percent compounded annually? 3

Explanation / Answer

Question (C ) Answer is option (D ) $1875 Annual Cost Savings =$300 Number of years =9years Discounting rate =8% present value of Annuity factor at 8% for 9 years =6.24689 =6.25 (rounded off to two decimals) present Worth of the inline filter = Annual Savings * present value of Annuity factor at 8% for 9 years present Worth of the inline filter = $300*6.25 =$1875 Question: (D ) present Worth =$400 Year cash Inflows PV factor at 12% Present Value 1 X 0.892857143 0.8929 X 2 X 0.797193878 0.7972 X 3 200 0.711780248 142.36 Present Worth 142.36+1.6901X $400 =$142.36+1.6901X 1.6901X =$400-$142.36 X =257.64/1.6901 =$152.44 Value of X =$152.44

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.