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Find the present worth of earthmoving equipment that has a first cost today of $159,000, an annual operating cost of $66,000, and a salvage value
Find the present worth of earthmoving equipment that has a first cost today of $159,000, an annual operating cost of $66,000, and a salvage value of 20% of the first cost after 5 years, these estimates being in future dollars. Assume that the real interest rate is 12% per year and that inflation has averaged 5.5% per year. Solve with inflation (a) not accounted for and (b) accounted for.
a) The present worth with inflation not accounted for is $ .
b) The present worth with inflation accounted for is $
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