Answer: $21291.6
Explanation:
The equivalent annual worth of the savings will be calculated thus:
Annual cost savings in year 1 = $15000
Increase in annual cost savings = $3000
Project period = 6 years
Interest rate = 15%
Annual worth of savings = A + G(A/G, 15%, 6)
= 15000 + 3000(15,000/3000, 5%, 6)
= 15000 + 3000(5000, 0.15, 6)
= 15000 + 3000(2.0972)
= 15000 + 6291.6
= 21291.6
Therefore, the annual worth of savings will be $21291.6
