Calculate the annual worth.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

• 3 different people working at any companies under the BPO industry in the Philippines. • What are the 3 different Vision, Mission, Duties and Responsibilities and Career Path of these people in their companies under the BPO industry?

Module 6 ⚫(1902) Buckner C X | (1902) How to d x (1902) Buckner F X (1902) Productic X WP Videoplayer Canvas Login | Ir x | + Σ R mybrcc.instructure.com/courses/417310/discussion_topics/3420114?module_item_id=20155705 Spring 2025 Home Announcements Modules Syllabus Grades 8 People BRCC-_Library DLASC Module 6 Discussion - Business Costs Relaunch to update For this discussion, think about where you work or a business you have a significant amount of knowledge about. What is a common product that the business sells? What are the main costs the business has to incur in order to be able to sell that product? Which of these costs are fixed and which are variable? How much additional costs would be incurred if it were to sell one additional unit of that product (marginal cost)? Write a discussion thread about this business, the product it commonly sells, and your answers to the above questions. Also, respond to at least two threads created by your classmates. In these responses, share what…

Refer to the video to answer the following: • what are all the key policies or all the strategies the Philippine government should prioritize to accelerate sustainable economic growth? • these should consider the Philippines current economic challenges, including inflation, unemployment, and the need for digital transformation. "The Philippines' Strong Economic Growth" (YouTube link: https://youtu.be/1YtEoGp2ZeM?siJQfIv5kbu0txVsLL.)

Answer 2

Question

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 6

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 7

Chapter 11, Problem 37P

(a):

To determine

Calculate the annual worth.

Answer 8

(a):

Expert Solution

Explanation of Solution

Defender: The first cost (FC) is $160,000. The annual operating cost (AC) is $7,000. The salvage value for the first year (SV1) is $50,000 and for the second year (SV2) is $40,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212) .

Challenger: The first cost (FC) is $210,000. The annual operating cost (AC) is $5,000. The salvage values for first year (SV1) is $100,000, second year (SV2) is $7,000, and third year (SV3) is $45,000. The interest rate is 12% compounded monthly. Thus, the effective interest rate (i) is 1%(0.1212).

The annual worth (AV) is calculated using the following formula:

AV=−FC(i(1+i)n(1+i)n−1)−AC+SVn(i(1+i)n−1) (1)

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of defender in 12-month period.

AV=−160,000(0.01(1+0.01)12(1+0.01)12−1)−7,000+50,000(0.01(1+0.01)12−1)=−160,000(0.01(1.12683)1.12683−1)−7,000+50,000(0.011.12683−1)=−160,000(0.011270.12683)−7,000+50,000(0.010.12683)=−160,000(0.08885)−7,000+50,000(0.07885)=−14,216−7,000+3,942.5=−17,274

The annual worth of the defender for 12 months is -$17,2754.

Substitute the respective values in Equation (1) to calculate the annual worth (AV) of challenger in 12-month period.

AV=−210,000(0.01(1+0.01)12(1+0.01)12−1)−5,000+100,000(0.01(1+0.01)12−1)=−210,000(0.01(1.12683)1.12683−1)−5,000+100,000(0.011.12683−1)=−210,000(0.011270.12683)−5,000+100,000(0.010.12683)=−210,000(0.08885)−5,000+100,000(0.07885)=−18,658.5−5,000+7,885=−15,774

The annual worth of the challenger for 12 months is -$15,774.

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 9

(a):

Expert Solution

Answer 10

(a):

Expert Solution

Answer 11

Expert Solution

Answer 12

(b):

To determine

Calculate the annual worth for 2 years.

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 13

(b):

To determine

Calculate the annual worth for 2 years.

Answer 14

(b):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 2 years (24 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-13,048
Challenger	-12,290

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 15

(b):

Expert Solution

Answer 16

(b):

Expert Solution

Answer 17

Expert Solution

Answer 18

(c):

To determine

Calculate the annual worth for 3 years.

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 19

(c):

To determine

Calculate the annual worth for 3 years.

Answer 20

(c):

Expert Solution

Explanation of Solution

Table 1 shows the annual worth of the defender and challenger for 3 years (36 months), which were obtained using Equation (1).

Table 1

Project	AV
Defender	-14,292
Challenger	-10,349

The challenger can be replaced if the annual cost of challenger is lower than the defender. Thus, the firm can replace the defender with challenger.

Answer 21

(c):

Expert Solution

Answer 22

(c):

Expert Solution

Answer 23

Expert Solution

Answer 24

Ch. 11 - Prob. 1P Ch. 11 - Prob. 2P Ch. 11 - Prob. 3P Ch. 11 - Prob. 4P Ch. 11 - Prob. 5P Ch. 11 - Prob. 6P Ch. 11 - Prob. 7P Ch. 11 - Prob. 8P Ch. 11 - Prob. 9P Ch. 11 - Prob. 10P

Calculate the annual worth.

Calculate the annual worth.

Explanation of Solution

Calculate the annual worth for 2 years.

Explanation of Solution

Calculate the annual worth for 3 years.

Explanation of Solution

Want to see more full solutions like this?

Chapter 11 Solutions