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Suppose that an asset costing $75,000 will result in an annual saving of $30,000 for as long as the asset is serviceable. The probabilities that

Suppose that an asset costing $75,000 will result in an annual saving of $30,000 for as long as the asset is serviceable. The probabilities that the asset will remain serviceable for a certain number of years are as follows:

No. of Yrs. Asset Functions (N)

Prob. Asset is Productive Exactly N Yrs [Prob(N)]

1

0.1

2

0.2

3

0.2

4

0.3

5

0.1

6

0.1

What is the expected net present worth (NPW) of the venture if the MARR = 16%?

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