Answer:
$58,149
Explanation:
To find the present value of the savings
Initially, we need to compute the Present worth before
Present worth before= 73,000(P/A,10%,5)
Present worth before= 73,000(3.7908)
Present worth before= $276,728
Next, we will determine the Present worth after
Present worth after= 16,000 + 58,000(P/F,10%,1) + 52,000(P/A,10%,4)(P/F,10%,1)
Present worth after= 16,000 + 58,000(0.9091) + 52,000(3.1699)(0.9091)
Present worth after=16,000+52,728+149,851
Present worth after= $218,579
The final step is to compute the Present worth of savings using this formula
Present worth of savings=Present worth before-Present worth after
Substituting into the formula
Present worth of savings = 276,728–218,579
Present worth of savings= $58,149
Thus, the present worth of the savings amounts to $58,149
