Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
Question
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Chapter 6, Problem 1P
To determine

Calculate the annual worth.

Expert Solution & Answer
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Explanation of Solution

Time period is denoted by n and interest rate is denoted by i. Annual worth (Aw) can be calculated as follows.

AW(CF0+CF1(1+i)1+CF2(1+i)2+...+CFn(1+i)n)(i(1+i)n(1+i)n1)=(300+100(1+0.1)1+160(1+0.1)2+150(1+0.1)3+200(1+0.1)4+200(1+0.1)5+130(1+0.1)6)(0.1(1+0.1)6(1+0.1)61)=24.23

Annual worth is $24.43.

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