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Evaluating A Single Project
Evaluating A Single Project
SINGLE PROJECT
$25,000
$8,000
$8,000
$8,000
$8,000
$8,000
2.
$25,000
$8,000
$8,000
$8,000
$8,000
$8,000
The CR distributes the initial cost (I) and the salvage value (S)
across the life of the asset.
CR (i%) = I (A/P, i%, N) S (A/F, i%, N)
where
Rk
Ek
N
=
=
=
=
-$15,000
-$7,000
$10,000
$10,000
$10,000
Expenses
Revenue
Solving, we find
End of
Year
Net Cash
Flow
Cumulative
PW at 0%
Cumulative
PW at 6%
-$42,000
-$42,000
-$42,000
$12,000
-$30,000
-$30,679
$11,000
-$19,000
-$20,889
$10,000
-$9,000
-$12,493
$10,000
$1,000
-$4,572
$9,000
$2,153