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Company ABC is considering whether to invest in system X. Below is the information of system X. 1) The present worth (PW, in terms of
Company ABC is considering whether to invest in system X. Below is the information of system X. 1) The present worth (PW, in terms of year 0) of the system is $1,145. 2) The initial cost of investment is $1,000. 3) The useful life of the system are 6 years. 4) The system will bring the following net revenue in year 1 to year 6. At the end of year 1 and year 4: $400 per year At the end of year 2, year 3, year 5 and year 6: $X per year 5) There is no salvage value for the system. 6) The annual market interest rate is 10% and the interest is compounded annually. (a) What is the amount of $X? Show all the steps of calculation. Correct your final answer to the nearest integer. (5 marks) (b) Based on the information given , explain whether it is worth for company ABC to invest in system X. (2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)
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