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A breakeven analysis for net present worth is performed with a MARR of 15% and a...

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Economics

A breakeven analysis for net present worth is performed with aMARR of 15% and a useful life of 20 years with the followingdata:
Initial Cost: $750,000
Annual Cost (O&M): $60,000/ year with an annual increase of$5,000 each year
Annual Revenue: $80,000/ year with an annual increase of $1,000each year
Salvage Value: $475,000
Determine the following:
a. If the project is viable (i.e. if the profit is larger than thecost using net present worth).
b. The gradient annual revenue increase to make the projectviable.
c. The salvage value to make the project viable.

Answer & Explanation Solved by verified expert
4.4 Ratings (936 Votes)
A R 15 Time 20 years Uniform annuity of OM cost 60000 Arithmetic gradient of OM cost 5000 Arithmetic gradient of annual revenue 1000 Uniform annuity of Annual revenue 80000 Net present worth 750000    See Answer
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