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# Answer to Question #240587 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question #240587
Vu Technology Corp just purchased new disaster simulation software for $10,000 now and having annual payments per year for 10 years starting from now for annual upgrades. If the interest rate is 2% per month 1) What is the annual worth of the payments? 2) What is the worth of the payments in the 10th year? 1 Expert's answer 2021-09-24T02:13:08-0400 Part a) NPV = (-50,000 + 30,000) + (30,000/1.07) =$8,037.38

Part b) NPV = (-50,000 + 30,000) + (30,000/1.10) = $7,272.73 Explanation Since, in each case, the NPV is higher than the NPV of the investment ($7,143), You can also think of it another way. The true

opportunity cost is what you could sell it for, i.e., $58,037 (or$57,273).

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