Exercise: Payback (Discounted) 2 Calculate Payback Period from Project Summary with Uniform Gradient Series. Given Revenues are A, the first year, and increase GR each subsequent year Ag = 5.2E3 $ GR = 3.0E3 $ Operation and Maintenance Costs are a Uniform Series of amount AOM AM = 1.8E3 $ Capital Costs = 1.9E4 $ Salvage Value = 2.6E3 $ Project Lifetime = 4 yr Effective Interest Rate = 0.08 (Unitless) Payback occurs in the first year with positive Cumulative Present Worth. If positive Cumulative Present Worth is not achieved, the Alternative does not payback. Question(s) 1. What is the cumulative Present Worth of the Alternative at the end of year 0? Answer: CPW = -1.9E4 $ = -1.90E4 $ 2. What is the cumulative Present Worth of the Alternative at the end of year 1? Answer: CPW = -1.9E4 $ + (5.2E3 $ 1.8E3 $) (1 + 0.08) = -1.59E4 $ 3. What is the cumulative Present Worth of the Alternative at the end of year 2? Answer: CPW = -1.954 $ + (5.2E3 $ 1.853 $) (1 +0.08) + ((5.253 $ + 3.0E3 $) 1.853 $) (1 +0.08) 2 =-1.04E4 $ 4. What is the cumulative Present Worth of the Alternative at the end of year 3? $ (Answer Significant Figures = 3) Score My Answer Practice Investigate 5. What is the cumulative Present Worth of the Alternative at the end of year 4? Attempt 2/3 of Part 4/5 for 1.7 points. Points (So Far/Possible/Total): 6/9.7/10 points. Exercise: Payback (Discounted) 2 Calculate Payback Period from Project Summary with Uniform Gradient Series. Given Revenues are A, the first year, and increase GR each subsequent year Ag = 5.2E3 $ GR = 3.0E3 $ Operation and Maintenance Costs are a Uniform Series of amount AOM AM = 1.8E3 $ Capital Costs = 1.9E4 $ Salvage Value = 2.6E3 $ Project Lifetime = 4 yr Effective Interest Rate = 0.08 (Unitless) Payback occurs in the first year with positive Cumulative Present Worth. If positive Cumulative Present Worth is not achieved, the Alternative does not payback. Question(s) 1. What is the cumulative Present Worth of the Alternative at the end of year 0? Answer: CPW = -1.9E4 $ = -1.90E4 $ 2. What is the cumulative Present Worth of the Alternative at the end of year 1? Answer: CPW = -1.9E4 $ + (5.2E3 $ 1.8E3 $) (1 + 0.08) = -1.59E4 $ 3. What is the cumulative Present Worth of the Alternative at the end of year 2? Answer: CPW = -1.954 $ + (5.2E3 $ 1.853 $) (1 +0.08) + ((5.253 $ + 3.0E3 $) 1.853 $) (1 +0.08) 2 =-1.04E4 $ 4. What is the cumulative Present Worth of the Alternative at the end of year 3? $ (Answer Significant Figures = 3) Score My Answer Practice Investigate 5. What is the cumulative Present Worth of the Alternative at the end of year 4? Attempt 2/3 of Part 4/5 for 1.7 points. Points (So Far/Possible/Total): 6/9.7/10 points