Respuesta :
The smallest annual income that may be expected from a project with a $92,498 investment cost, a $9,936 salvage value, a 15-year life, and a 15% return is $1560.83.
What is the salvage value?
Salvage value is the anticipated book value of an asset after depreciation is complete and is based on what a firm expects to get in exchange for the asset after the end of its useful life. A depreciation schedule must consequently take into account an asset's predicted salvage value.
Any asset that a business expects to depreciate over time might have an estimated salvage value calculated. Each company will have its own standards for figuring out salvage value. Because an asset's salvage value is so low, some businesses can decide to always depreciate it to zero dollars.
In general, the salvage value is significant because, after depreciation has been fully expensed, it will represent the asset's carrying value on a company's books.
It is based on the amount that a business anticipates making when selling the asset at the end of its useful life. In other instances, salvage value may simply be the price the business expects to receive when selling a depreciated, non-operational asset for components.
Calculation:
Investment cost = $92,498
Salvage value = $9,936
Life of the project = 15 years
MARR = 15%
Calculation of the smallest acceptable annual income:
Let the annual income be A
By calculating the present value of the cash inflows and outflows we have,
$92,498 = A*PVIFA (15%, 15 years) + (Salvage Value/1.15^15)
$92,498 = A*5.8474 + ($9,936/8.1371)
$92,498 - 1221.0738 = A*5.8474
$91276.9262 = A*5.8474
A = $15609.83
Learn more about the salvage value with the help of the given link:
brainly.com/question/27557482
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