# Reconsider the data from Problem 4. Management has expressed some concern over the life of the project

## Question:

Reconsider the data from Problem 4. Management has expressed some concern over the life of the project and the impact of possible early termination. As a result, you have developed additional data based on three possible salvage value scenarios. In each case, the possible salvage values progress from \(\$ 70,000\) at EOY 0 to \(\$ 2,000\) at EOY

Case 1 is based on a schedule provided by the vendor as shown below.

Case 2 is based on a gradient series decline. Case 3 is based on a geometric series decline.

**a.** Determine the salvage decline rate for the gradient case.

**b.** Determine the salvage value decline rate for the geometric case.

**c.** Determine the annual worth for each case for each planning horizon from 1 to 6 by 1.

**d.** Plot a graph similar to Figure 7.1 depicting your results from c.

Data from problem 4

A project has been selected for implementation. The net cash flow (NCF) profile associated with the project is shown below. MARR is 10 percent/year.

## Step by Step Answer:

**Related Book For**

## Principles Of Engineering Economic Analysis

**ISBN:** 9781118163832

6th Edition

**Authors:** John A. White, Kenneth E. Case, David B. Pratt