Question

calculateャ equivaled uniform annual worth CEUAw) tte follown-3 Cash flow Ci 6%) \ f this cash flow, IS a proposed project-, do yon reco mPQd+와s progec+2 gıs.pr. 회驷tis. 12 150 事175 2o 300 Зоо

Answer 1

A	B	C	D	E	F	G	H	I	J	K	L	M	N	O	P
2
3		Interest rate	6%
4
5		Year	0	1	2	3	4	5	6	7	8	9	10
6		Cash Inflow			$150	$150	$150	$150	$250	$250	$250	$250	$250
7		Cash outflow				($100)	($125)	($150)	($175)	($200)			($300)
8		Net Cash Flow			$150	$50	$25	$0	$75	$50	$250	$250	($50)	=N6+N7
9
10		Equivalent uniform annual worth (EUAW) can be calculated as follows:
11
12		EUAW	=NPW*(A/P,i,n)
13
14		NPW calculation:
15		NPW of the project is present value of all the future cash flows discounted at required rate of return less the initial investment.
16
17		Year	0	1	2	3	4	5	6	7	8	9	10
18		Net Cash Flow (CF)	$0	$0	$150	$150	$150	$150	$250	$250	$250	$250	$250
19		MARR (i)	6%
20		(P/F,i,n) for each year	1.00	0.94	0.89	0.84	0.79	0.75	0.70	0.67	0.63	0.59	0.56	=1/((1+$D19)^N17)
21		Present Value of cash flows = CF*(P/F,i,n)	$0.00	$0.00	$133.50	$125.94	$118.81	$112.09	$176.24	$166.26	$156.85	$147.97	$139.60	=N18*N20
22		NPW	$1,277.28	=SUM(D21:N21)
23
24		EUAW Calculation
25		EUAW	=NPW of the cash flows *(A/P,i,n)
26
27		NPW of cash flow	$1,277
28		MARR (i)	6%
29		n	10
30
31		EUAW	=NPW of the cash flows *(A/P,i,n)
32			$173.54	=D27*(1/PV(D28,D29,-1,0))
33
34		Hence EUAW is	$173.54
35