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B- Based on the PW value you got in the previous question, is this investment economically...

B- Based on the PW value you got in the previous question, is this investment economically justified or not? type you explanation below

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Answer #1

Just now I have solved the question with the following information.

Price = $ 134,595, SV = $ 9973, MARR = 15%,

Annual saving = $ 0.1 × 300,000 = $ 30,000

Useful life = 6 years.

Calculating the present worth

As we can see from the calculation that the present worth is negative thus the firm will have to bear loss if it invests in the project. Thus, the project is not economically justified.

Note: Decision rule for PW

If PW > 0, Accept

PW = 0, Indifferent

PW < 0, Reject.

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me please help. Thank you.

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