Answer:
The salvage value taken is $16,368.34
Explanation:
ANSWER:
initial cost = $182,730
rate = 15%
n = 7 years
annualized capital cost = $42,442
salvage value = ?
first we will find the present worth.
annual worth = r * present worth / ( 1 - ( 1+ r) ^ - n)
42,442 = 15% * pw / ( 1 - (1+15%) ^ - 7)
42,442 = 0.15pw / ( 1 - (1.15) ^ -7)
42,442 = 0.15 pw / ( 1 - 0.37593)
42,442 = 0.15 pw / 0.6240
42,442 * 0.6240 = 0.15 pw
$26,486.48 = 0.15 pw
pw = $26,486.48 / 0.15
pw = $176,576.5343
pw also equals the initial investment + salvage value.
pw = initial investment + salvage value(p/f,i,n)
i = 15% , n = 7 years and pw will be taken negative here
-176,576.5343 = -182,730 + salvage value(p/f,15%,7)
-176,576.5343 +182,730 = salvage value(p/f,15%,7)
6,153.465 = salvage value * 0.3759
salvage value = 6,153.465 / 0.3759
salvage value = 16,368.34
so , the salvage value taken is $16,368.34
