Please answer question 2: Using exactly the same information from Problem No. 1 above, calculate the Present worth of Project Y at 8% per year interest rate.You can see the data in picture 1 Using the cost data for Project X and Project Y below, conduct a Present Worth Analysis to calculate the Present Worth of Project X at time 0 over LCM (least common multiple) years of the life of both X and Y. Given an 8% per year interest rate.| Parameter | Project X | Project Y ||----------------|--------------|--------------|| First Cost | -60,000 | -150,000 || Annual Cost | -12,000 | -7,000 || Salvage Value | 5,000 | 80,000 || Life | 10 years | Infinity |This table outlines the financial parameters for two projects:1. **First Cost**: Initial investment required for each project.2. **Annual Cost**: Recurring cost incurred every year.3. **Salvage Value**: Residual value at the end of the project's life.4. **Life**: Duration over which the project is expected to generate returns.For Project X, the life is 10 years, while Project Y has an infinite life, indicating ongoing operation without a planned end. The interest rate for these calculations is set at 8% per year. Using exactly the same information from Problem No. 1 above, calculate the Present worth of Project Y at an 8% per year interest rate.- $ -237,500 $- $ -253,140 $- $ -216,590 $- $ -208,234 $

Cash flow:The net amount of cash or cash equivalents that enters and exits a business or financial investment during a certain time period is referred to as cash flow. It is an essential indicator of a business's financial health and performance, giving information about its capacity to generate positive cash inflows and pay bills.Present Worth formula:For Project Y:The first cost of Project Y),(Annual cost of Project Y),P(A/F,8%,infinity) is the present worth factor for an annuity with an 8% interest rate and infinite periods,(Salvage value of Project Y).Now, plug in the values:Project Y:The term approaches zero because it's in the denominator and the exponent becomes very large. Therefore, the salvage value in year infinity does not have a significant impact on the present worth calculation.So, among the provided options, the closest one is b. −253,140.

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Using the cost data for Project X and Project Y below, conduct a Present Worth Analysis to calculate the Present Worth of Project X at time 0 over LCM years of the life of both X and Y Given 8% per year interest rate. X First Cost -60,000 Annual Cost -12,000 Salvage Value Life 5,000 10 Y -150,000 -7,000 80,000 Infinity

Using the cost data for Project X and Project Y below, conduct a Present Worth Analysis to calculate the Present Worth of Project X at time 0 over LCM years of the life of both X and Y Given 8% per year interest rate. X First Cost -60,000 Annual Cost -12,000 Salvage Value Life 5,000 10 Y -150,000 -7,000 80,000 Infinity

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please answer question 2:

Using exactly the same information from Problem No. 1 above, calculate the Present worth of Project Y at 8% per year interest rate.

You can see the data in picture 1

Using the cost data for Project X and Project Y below, conduct a Present Worth Analysis to calculate the Present Worth of Project X at time 0 over LCM (least common multiple) years of the life of both X and Y. Given an 8% per year interest rate.

| Parameter | Project X | Project Y |
|----------------|--------------|--------------|
| First Cost | -60,000 | -150,000 |
| Annual Cost | -12,000 | -7,000 |
| Salvage Value | 5,000 | 80,000 |
| Life | 10 years | Infinity |

This table outlines the financial parameters for two projects:

1. **First Cost**: Initial investment required for each project.
2. **Annual Cost**: Recurring cost incurred every year.
3. **Salvage Value**: Residual value at the end of the project's life.
4. **Life**: Duration over which the project is expected to generate returns.

For Project X, the life is 10 years, while Project Y has an infinite life, indicating ongoing operation without a planned end. The interest rate for these calculations is set at 8% per year.

Using exactly the same information from Problem No. 1 above, calculate the Present worth of Project Y at an 8% per year interest rate.

- $ -237,500 $
- $ -253,140 $
- $ -216,590 $
- $ -208,234 $

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