A project is being considered that has a first cost of $12,500, creates $5000 in annual cost savings, requires $3000 in annual operating costs, and has a salvage value of $2000 after a project life of 3 years. If interest is 10% per year, which formula calculates the project's present worth? (a) PW = 12,500 (P/F, 10%, 1) + (-5000 + 3000) (P/A, 10%, 3) (b) PW = -12,500 + (5000-3000) (P/A, 10 %, 3 (d) PW=-12, 500+ - 2000 (F/P, 10%, 3) )-2000 (P/F, 10%, 3) (c) PW = 12,500 (F/P, 10%, 3) + (5000-3000) (F/A, 10%, 3) +2000 5000 (P/A, 10%, 3) - 3000 (P/A, 10%, 3) + 2000 (P/F, 10%, 3)

A project is being considered that has a first cost of $12,500, creates $5000 in annual cost savings, requires $3000 in annual operating costs, and has a salvage value of $2000 after a project life of 3 years. If interest is 10% per year, which formula calculates the project's present worth? (a) PW = 12,500 (P/F, 10%, 1) + (-5000 + 3000) (P/A, 10%, 3) (b) PW = -12,500 + (5000-3000) (P/A, 10 %, 3 (d) PW=-12, 500+ - 2000 (F/P, 10%, 3) )-2000 (P/F, 10%, 3) (c) PW = 12,500 (F/P, 10%, 3) + (5000-3000) (F/A, 10%, 3) +2000 5000 (P/A, 10%, 3) - 3000 (P/A, 10%, 3) + 2000 (P/F, 10%, 3)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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