i.
Present Worth of first Cost and revenue
Expected Worth of Present worth.

Answer to Problem 36P
Present worth of first cost is $95500.
Expected Worth of Present worth is -$19295.
Explanation of Solution
Given:
Useful Life = 10 year
Interest Rate = 12%.
Calculation:
First Costs | Probability | Net Revenues | Probability |
$300,000 | 0.2 | $70,000 | 0.3 |
$400,000 | 0.5 | $90,000 | 0.5 |
$600,000 | 0.3 | $100,000 | 0.2 |
Where,
PW is the present value.
C is the initial cost of the option examined.
A is the annual amount that is consistent in the cash flow series.
P is the present worth value of the time series.
i is the interest rate.
n is the number of terms that the money is for.
Present worth for pessimistic is $95500.
First Costs | Probability | Net Revenues | Probability | Present Worth |
$300,000 | 0.2 | $70,000 | 0.3 | $95,500 |
$400,000 | 0.5 | $90,000 | 0.5 | ($108,500) |
$600,000 | 0.3 | $100,000 | 0.2 | $35,000 |
Expected worth of present worth
Useful Life = 10 year
Interest Rate = 12%
Conclusion:
Expected Worth of Present worth is -$19295
Present worth of first cost is $95500.
ii.
Expected first costs, net revenues and present worth for the expected values.

Answer to Problem 36P
Present worth of expected value is -$45900.
Explanation of Solution
Calculation:
Expected first cost = $44000
Expected net Revenue
Expected Net Worth = $86000
Conclusion:
Present worth of expected value is -$45900.
iii.
Answers in part a and b match or not.

Answer to Problem 36P
Both values in both parts don’t match.
Explanation of Solution
Given:
Useful Life = 10 year
Interest Rate = 12%.
Concept used:
Both values in both parts don’t match. As in the first part, joint probability is used to get the expected worth of present worth for the first value and revenue whereas in second part expected first cost and and expected net revenue is calculated separately and after that present worth is calculated.
Conclusion:
Both values in both parts don’t match.
Want to see more full solutions like this?
Chapter 10 Solutions
ENGINEERING ECONOMIC ENHANCED EBOOK
- How Command Economics Relate to Principle Of Economics?arrow_forwardhow commond economies relate to principle Of Economics ?arrow_forwardCritically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forward
- Critically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forwardOutline the nine (9) consumer rights as specified in the Consumer Rights Act in South Africa.arrow_forwardIn what ways could you show the attractiveness of Philippines in the form of videos/campaigns to foreign investors? Cite 10 examples.arrow_forward
- Explain the following terms and provide an example for each term: • Corruption • Fraud • Briberyarrow_forwardIn what ways could you show the attractiveness of a country in the form of videos/campaigns?arrow_forwardWith the VBS scenario in mind, debate with your own words the view that stakeholders are the primary reason why business ethics must be implemented.arrow_forward
- The unethical decisions taken by the VBS management affected the lives of many of their clients who trusted their business and services You are appointed as an ethics officer at Tyme Bank. Advise the management regarding the role of legislation in South Africa in providing the legal framework for business operations.arrow_forwardTyme Bank is a developing bank in South Africa and could potentially encounter challenges similar to those faced by VBS in the future. Explain five (5) benefits of applying business ethics at Tyme Bank to prevent similar ethical scandals.arrow_forward1.3. Explain the five (5) ethical challenges that can be associated with the implementation of the National Health Insurance (NHI) in South Africa.arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education





