Question

The University has just invested $ 7,945 in a new desktop publishing system. From past experience, annual cash returns are estimated as A(t) = $8000 - $4000(1+0.15)-1 s(t) = $6000(1 -0.7 ) where A(t) stands for the net cash flow in period t and S(t) stands for the salvage value at the end of year t, and t > 1 If the MARR is 12%, compute the annual equivalent cost in year 2. (Note: Don't use the $ sign in your answer and round it to 2 decimal places)

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Answer 1

Net How in year 1, A(H) - 8000-4000 (10.18) +- A(1) 2 8000 - 4000 (1.15 1.1 A (2) z 8000 - 2000 (1.15) 2- Salvage at the qud year end, S(4) boodt- oft S(2) - 6000 (1-o.th? 2 540 4000 3400 -4945 4000 3400 540 Time Initial Cost Cash inflow Residual Value Net cash flow 12% Disc. factor Present Value Net Present Value - 1945 4000 1 0.89 2857 -7995 3 571.428 - 1232.632) 3940 0.797194 3140.94 Therefore, equivalent Annual Cost a NPN Annual factor 12% for 2yos -12 32.632 1.6901 2 - 729.32