Your company is evaluating whether to purchase an equipment or not. The initial cost is $49,167. According to your estimate, the equipment can have annual savings of $6,689 with 0.5 possibility or have annual savings of $5,555. The useful life of the equipment is 10 years, and with equal chance to have a salvage value of $18,666 or $15,868. Given MARR = 6%, what is the expected NPV of the equipment?

Question #2

For a residential building project, the developer has estimated the capital investment, net rental revenue, and resale value after 6 years for the following three scenarios. Given the developer's MARR is 8%, what is the estimated B/C ratio of this project?

	Optimistic	Most Likely	Pessimistic
Capital investment	$2,199,901	$2,301,241	$2,706,924
Resale value	$2,549,421	$2,401,624	$2,255,922
Net annual benefit	$296,659	$242,793	$184,100