Question

Consider a project with an initial investment of $50,000 and a salvage value at the end of 10 years of $10,000. The study period is 6 years and the MARR is 10%. Determine the imputed market value at the end of the study period.

Answer 1

Investmet = 50,000

Salvage value = 10,000

MARR = 10%

Total life = 10 years

Study period = 6 years

PVIF 10%,10 = 0.3855 (As per calculattion from calculators)

PVIFA 10%,10-7 = 1.2761 (As per calculattion from calculators)

Imputed market value at the end of 6 years

= Investment*(PVIF 10%,10) - Salvage value*(PVIF 10%,10)*(PVIFA 10%, 10-7) + Salvage Value*(PVIFA 10% , 10-7)

= 50,000*0.3855 - (10,000*0.3855*1.2761) + 10,000*1.2761

= 19,275 - 4,919.37 + 12,761

= $ 27,116.63

Therefore the answer is $ 27,116.63

1276.10