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, what is the expected NPV of the equipment?

, what is the expected NPV of the equipment?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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22 ements ons ents ock VHLCentral Your company is evaluating whether to purchase an equipment or not. The initial cost is $41,238. According to your estimate, the equipment can have annual savings of $6,005 with 0.1 possibility or have annual savings of $5,289. The useful life of the equipment is 10 years, and with equal chance to have a salvage value of $18,572 or $15,475. Given MARR = 6%, what is the expected NPV of the equipment? V 1 2 3 4 9 7 N 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 TRAZARAAR E223 25 26 27 28 29 30 31 33 34 38 40 45 30 55 60 45 70 75 ww XS 828 Single Payment Compound Amount Factor Find F Given P F/P 1.060 1.124 1.191 1.262 1.338 1419 1.504 1.394 1.689 1.791 1.898 2012 2.133 2261 2.397 2540 2.693 2.854 3,026 3.207 3.400 3.604 3.820 4049 4.292 4.549 4.822 5.1312 5418 5.743 6.068 6.453 6.841 7,251 7.666 10286 13.765 18420 24.650 32.988 44145 39 076 79,057 105.796 141578 189.464 253.545 339 300 Present Worth Factor Find P Given F P/F 9434 8900 3396 7921 7473 7050 1099 6274 3919 5584 3268 4970 4688 4423 4173 3936 3714 3503 3305 3118 2942 2775 2618 2470 2330 2198 2074 1956 1846 1741 1643 1550 1462 1379 1301 0972 0227 0543 0406 0303 0227 0169 0126 00945 90000 00528 00394 Sinking Fund Factor Find A Given F AF 10000 4854 3141 2286 1774 1434 1191 1010 0870 0799 0668 0593 0530 0476 0430 0390 15X0 0324 0296 0272 0250 0230 0213 0197 0182 0169 0157 0146 0136 0120 1110 0110 0103 00960 DONYT 00646 00470 00344 00254 00188 00199 00103 00077 00057 00043 00032 00024 0001 Compound Interest Factors Uniform Payment Series Capital Compound Recovery Amount Factor Find F Factor Find A Given P A/P Given A FIA 1.0600 5454 3741 2886 2374 2034 1791 1610 1470 1359 1268 1193 1130 1076 1000 0990 0954 0924 0896 0872 0850 08.30 0813 0797 01782 0769 0757 0746 0736 0726 0718 0710 0203 0696 0690 $990 0647 0634 0625 0619 0614 0190 8090 9000 0604 0603 0602 0602 1.000 2060 3.184 4.375 5637 6.975 8.394 9.897 11.491 13.181 14.972 16.870 18.882 21.015 21.276 25.672 28.213 30.906 33.760 36.786 39.993 43.392 46.996 50.815 54864 59.156 63.706 68.528 73.640 79.058 84801 90390 97.343 181301 111435 154.762 212.743 290335 394171 533.126 719080 967.928 13009 17466 23430 31411 42091 36383 Present Worth Factor Find P Given A P/A 0,143 1.833 2673 3.465 4212 4.917 3.382 6210 6.802 7.360 7.887 8.384 8.853 9.295 9712 10.106 10.477 10.828 11.158 11.470 11.764 12042 12.303 12.550 12.783 13.003 13.211 13.406 13591 13765 13.929 14.084 14.230 HUMA 14498 15.046 15.456 13.762 15.991 16.161 16.260 16.383 16.456 16.500 16.349 16379 16.601 16.618 Arithmetic Gradient Gradient Present Worth Find P Given G P/G Gradient Uniform Series Find A Given G A/G 0 0485 0.961 1.427 1.104 2.330 2.768 3.195 3.613 4,022 4.421 4.811 5.192 1955. 5.926 6.279 6.624 6.960 7.287 7.605 7.915 8.217 8.510 8.795 9072 9.341 9.603 9.857 10.103 10342 10.574 10.799 11.017 11.228 11.432 12.359 13.141 13.796 14341 14.791 15.160 15:461 15,706 15.900 16.062 16.189 16.290 16.371 0 0.890 2360 4.945 7.914 11.499 15.450 19.841 24.577 29.602 34.870 40.337 45.963 51.713 57.554 63.459 69.401 75.357 81.300 87.230 93.113 98.941 104,700 110.381 115.973 147286 152.000 156.768 161.319 165.743 21 21 23 24 25 121,468 26 126.360 27 132.142 28 29 137.309 142 359 185.957 201109 217457 229.322 239,043 246.945 253.327 238453 262.549 265.810 268.395 270,437 212047 100 95 2332282828 GARR 30 18 19 20 31 32 33 34 35 40 45 50 55 09 65 70 10 11 75 12 13 14 15 16 17 90 9 7
Transcribed Image Text:22 ements ons ents ock VHLCentral Your company is evaluating whether to purchase an equipment or not. The initial cost is $41,238. According to your estimate, the equipment can have annual savings of $6,005 with 0.1 possibility or have annual savings of $5,289. The useful life of the equipment is 10 years, and with equal chance to have a salvage value of $18,572 or $15,475. Given MARR = 6%, what is the expected NPV of the equipment? V 1 2 3 4 9 7 N 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 TRAZARAAR E223 25 26 27 28 29 30 31 33 34 38 40 45 30 55 60 45 70 75 ww XS 828 Single Payment Compound Amount Factor Find F Given P F/P 1.060 1.124 1.191 1.262 1.338 1419 1.504 1.394 1.689 1.791 1.898 2012 2.133 2261 2.397 2540 2.693 2.854 3,026 3.207 3.400 3.604 3.820 4049 4.292 4.549 4.822 5.1312 5418 5.743 6.068 6.453 6.841 7,251 7.666 10286 13.765 18420 24.650 32.988 44145 39 076 79,057 105.796 141578 189.464 253.545 339 300 Present Worth Factor Find P Given F P/F 9434 8900 3396 7921 7473 7050 1099 6274 3919 5584 3268 4970 4688 4423 4173 3936 3714 3503 3305 3118 2942 2775 2618 2470 2330 2198 2074 1956 1846 1741 1643 1550 1462 1379 1301 0972 0227 0543 0406 0303 0227 0169 0126 00945 90000 00528 00394 Sinking Fund Factor Find A Given F AF 10000 4854 3141 2286 1774 1434 1191 1010 0870 0799 0668 0593 0530 0476 0430 0390 15X0 0324 0296 0272 0250 0230 0213 0197 0182 0169 0157 0146 0136 0120 1110 0110 0103 00960 DONYT 00646 00470 00344 00254 00188 00199 00103 00077 00057 00043 00032 00024 0001 Compound Interest Factors Uniform Payment Series Capital Compound Recovery Amount Factor Find F Factor Find A Given P A/P Given A FIA 1.0600 5454 3741 2886 2374 2034 1791 1610 1470 1359 1268 1193 1130 1076 1000 0990 0954 0924 0896 0872 0850 08.30 0813 0797 01782 0769 0757 0746 0736 0726 0718 0710 0203 0696 0690 $990 0647 0634 0625 0619 0614 0190 8090 9000 0604 0603 0602 0602 1.000 2060 3.184 4.375 5637 6.975 8.394 9.897 11.491 13.181 14.972 16.870 18.882 21.015 21.276 25.672 28.213 30.906 33.760 36.786 39.993 43.392 46.996 50.815 54864 59.156 63.706 68.528 73.640 79.058 84801 90390 97.343 181301 111435 154.762 212.743 290335 394171 533.126 719080 967.928 13009 17466 23430 31411 42091 36383 Present Worth Factor Find P Given A P/A 0,143 1.833 2673 3.465 4212 4.917 3.382 6210 6.802 7.360 7.887 8.384 8.853 9.295 9712 10.106 10.477 10.828 11.158 11.470 11.764 12042 12.303 12.550 12.783 13.003 13.211 13.406 13591 13765 13.929 14.084 14.230 HUMA 14498 15.046 15.456 13.762 15.991 16.161 16.260 16.383 16.456 16.500 16.349 16379 16.601 16.618 Arithmetic Gradient Gradient Present Worth Find P Given G P/G Gradient Uniform Series Find A Given G A/G 0 0485 0.961 1.427 1.104 2.330 2.768 3.195 3.613 4,022 4.421 4.811 5.192 1955. 5.926 6.279 6.624 6.960 7.287 7.605 7.915 8.217 8.510 8.795 9072 9.341 9.603 9.857 10.103 10342 10.574 10.799 11.017 11.228 11.432 12.359 13.141 13.796 14341 14.791 15.160 15:461 15,706 15.900 16.062 16.189 16.290 16.371 0 0.890 2360 4.945 7.914 11.499 15.450 19.841 24.577 29.602 34.870 40.337 45.963 51.713 57.554 63.459 69.401 75.357 81.300 87.230 93.113 98.941 104,700 110.381 115.973 147286 152.000 156.768 161.319 165.743 21 21 23 24 25 121,468 26 126.360 27 132.142 28 29 137.309 142 359 185.957 201109 217457 229.322 239,043 246.945 253.327 238453 262.549 265.810 268.395 270,437 212047 100 95 2332282828 GARR 30 18 19 20 31 32 33 34 35 40 45 50 55 09 65 70 10 11 75 12 13 14 15 16 17 90 9 7
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