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the The Polynesian Urbanization Authority (PUA) buys new computuers for $100,000 in May. They estimate annual...

the The Polynesian Urbanization Authority (PUA) buys new computuers for $100,000 in May. They estimate annual revenue will be from $50,000 to $400,000, but most likely about $300,000 over the next 5 years.

Operating and Maintenance costs will remain constant at $75,000/year. Their MARR-9%

Inflation is a constant 2.1%

1- what is the expected revenue for the company over 5 years using a beta distribution ?

2- what is the present worth of this revenue, adjusted for inflation?

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Answer #1
Answer(2)
Year 0 1 2 3 4 5
Initial Cost -100000
Annual Revenue 300000 300000 300000 300000 300000
Less:- O&M Cost 75000 75000 75000 75000 75000
EBIT 225000 225000 225000 225000 225000
PVF@9% 1 0.917 0.842 0.772 0.708 0.650
Present Worth of Revenue -100000 206422.02 189378.00 173741.28 159395.67 146234.56
FVF @ 2.1% 1.110 1.087 1.064 1.043 1.043 1
Value at Year 5 -110950.36 224315.35 201580.85 181132.78 166176.86 146234.56
FV Of revenue 808490.04
PVAF@9% 3.8896
Present Worth of Revenue after Adjusting inflation 207859.4302
Answer(1)
Revenue 1500000
Less:- O&M Cost 375000
Less:- Initial Cost 100000
Expected Revenue 1025000
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