W13_RW_Calculate Annual Worth (AW)


Problem Statement

I try to solve the question on Engineering Economy 5th Edition for the subject of Time Value of Money, in chapter 5, no 5-35, p 216.

Answer:

The equation:

Where:

AW= Annual Worth

R= Saving

E=Expenses

S= Salvage Value (market) at the end of the period.

N= Period (year)

I= Initial Investment

X= R-E

 

To solve the above problem then:

AW(15%) = X-$1,000,000(A/P,15%,8) + S(A/F,15%,8)

=X-$1,000,000(0.2229) + 0(0.0874)

= X – $222,900

We know that the cost of recycle is $1/sq yard and selling price is $3/sq yard, then the revenue is $2/sq yard, to know the minimum square yard of carpet to be recycle, then

$222,900 / $2 = 111,450 Sq Yard in total

or

13,931.25 Sq Yard / Year.

Reference:

Sullivan, W.G., Wicks, E. M., & Koelling, C. P. (2011). Engineering Economy 5th Edition, Chapter 5, p189

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1 thought on “W13_RW_Calculate Annual Worth (AW)

  1. Hi Ridwan, this is not what I am looking for……. I do NOT want you using this forum to solve the assigned problems….. What I am expecting is for you to use TRANSFERENCE to apply this same problem to your REAL LIFE working conditions. http://www.nwlink.com/~donclark/hrd/learning/transfer.html The purpose of this blog is for you to demonstrate that you understand the concepts and are able to ADAPT them for use in your own day to day working or personal world.

    Why am I doing this? Because on the exam, you will NOT see these exact probllems. You will see problems which are SIMILAR. This assignment is designed to develop your critical thinking skills- your ability to take a concept and demonstrate that you have sufficient understanding of the concept or formulate that you can apply it under DIFFERENT CIRCUMSTANCES.

    Sorry, but I have to reject this posting (not the least because it is a copyright violation) and would STRONGLY urge you to partner with Hari or Eli or anyone else consistently getting 4 or 5 stars.

    Also, I expect to see a MINIMUM of two and preferably THREE references……..

    Don’t give up….. It is important that you master this skill…… Let your team help you….

    BR,
    Dr. PDG, Jakarta

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