A project requires initial investment of $10,000 and will earn revenue of $3,000 per year over the next 5 years

Economics Jun 23, 2021

A project requires initial investment of $10,000 and will earn revenue of $3,000 per year over the next 5 years. The MARR is 5.4%. What is the present worth of the project's benefits?

Expert Solution

Computation of Present Worth of Project's Benefits:

Present Worth = A*((1+i)^n - 1)/(i*(1+i)^n)

= 3000*((1+5.4%)^5 - 1)/(5.4%*(1+5.4%)^5)

=3000*1.300778/7.024%

= 3000*4.28202

Present Worth = 12,846.06

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