Question

# Using Microsoft Excel: 1. A machine will cost \$50,000 to purchase. Annual operating cost will be...

Using Microsoft Excel:

1. A machine will cost \$50,000 to purchase. Annual operating cost will be \$3,000. This machine will save \$15,000 per year in labor costs. The salvage value after 5 years will be \$10,000. Calculate the machine’s equivalent uniform annual worth (EUAW) for the interest rate of 8%.

2. The maintenance cost for a generator have been recorded over its five year life. Calculate EUAC at 8 percent per year.

 Year 1 2 3 4 5 Cost \$1100 1500 1300 1900 2200

Thank you

 Q1. Initial investmente -50000 Annual operating cashflows: Annual savings 15000 Less: Annual ccost 3000 Annual Cashflows 12000 Multiply: Annuity PVF at 8% 3.99271 present value of inflows 47912.52 Present value of salvage (10000*0.680583) 6805.83 Net present value 4718.35 Divide: Annuity PVF 3.99271 EUAW 1181.741 Q2. Year Cashflows PVF at 8% Present Value 1 -1100 0.925926 -1018.52 2 -1500 0.857339 -1286.01 3 -1300 0.793832 -1031.98 4 -1900 0.73503 -1396.56 5 -2200 0.680583 -1497.28 Net present value -6230.35 Divide: Annuity PVF 3.99271 EUAC -1560.43

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