Problem 1. (4.5)

Uncle Wilburs trout ranch is now for sale for $30,000. Annual property taxes, maintenance, supplies, and so on are estimated to continue to be $3,000 per year. Revenues from the ranch are expected to be $10,000 next year and then to decline by $400 per year thereafter through the 10^th year. If you bought the ranch, you would plan to keep it for only five years and at that time to sell it for the value of the land, which is $15,000. If your desired MARR is 12% per year, should you become a trout rancher? Use the PW method.

A certain service can be performed satisfactorily by process R, which has a capital investment cost of $8,000, an estimated life of 10 years, no market value, and annual net receipts (revenues expenses) of $2,400. Assuming a MARR of 18% before income taxes, find the FW of this process and specify whether you would recommend it.