Engineering Board Exam Reviewer · Present Worth Analysis · medium
A machine costs P500,000, lasts 10 years, and has a salvage value of P50,000. Maintenance is P20,000 in year 1 and increases by P2,000 each year. Find the present worth of cost at 8% interest.
- P686,155.29
- P611,041.95
- P624,462.12
- P662,995.62
Answer
D. P662,995.62
Solution
PW=500,000-50,000(P/F,8%,10)+20,000(P/A,8%,10)+2,000(P/G,8%,10)=500,000-23,159.67+134,201.63+51,953.66=P662,995.62.
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