Q&E 6.8 Project 1 Maintenance costs: $ 750 + $ 150 per yr. = $ 900 per yr Need to calculate present value of stream of future costs:

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Presentation transcript:

Q&E 6.8 Project 1 Maintenance costs: $ $ 150 per yr. = $ 900 per yr Need to calculate present value of stream of future costs:

S = 900 per yr r = 8% (.08) n = 30 yrs

Project 2 Capital cost (present) = $10,000 Maintenance costs: $ 800 every 5 yrs Need to calculate present value of each future cost:

Yr of costDiscount factorCostDiscounted 01/(1.08)^ 0 = /(1.08)^ 5 = /(1.08)^ 10 = /(1.08)^ 15 = /(1.08)^ 20 = /(1.08)^ 25 = /(1.08)^ 30 =