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How do you solve for If Machine A has a NPW of $29,282 and Machine B...

How do you solve for

If Machine A has a NPW of $29,282 and Machine B has a NPW of $40,847 over an 8-year period, what is the difference in the annual worth of Machine B over Machine A at a rate of 10% p. y. c. y?

Right answer:

$2,168
Answers:

$1,579

$1,789

$2,168

$2,328
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Homework Answers

Answer #1

$2,168

Working:

a. Present Value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.10)^-8)/0.10 i 10%
= 5.3349262 n 8
b. Difference in NPW = $       40,847 - $       29,282
= $       11,565
c. Difference in annual worth = $       11,565 / 5.3349262
= $         2,168
Note:
NPW is the present value of annual worth.
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