# Present worth analysis

• May 9th 2008, 07:27 PM
jason03
Present worth analysis
Im doing a PW analysis of two road paving options.....so if the one plan is 10 years and the other 15, I would have to take them both out to 30 years to compare.

if the initial cost for plan A is 500k, annual maint. = 35k, periodic surfacing = 350k, and the resurfacing interval is every 10 years....

im trying to figure how to set it up

PW =500,000 + 35,000(P/F,i,30) + ?

im not sure how to handle the resurfacing.....it should be once every 10 years....

not sure?
• May 10th 2008, 12:30 PM
TKHunny
I'm not real certain what your "P" and "F" are. I'll just use your notation with faith.

If v = 1/(1+i),

$PW = 500 + 35(P/F,i,30) + 350(v^{10}+v^{20}+v^{30})$

Or, if $v10 = [1/(1+i)]^{10}$, and i10 = (1/v10)-1

$PW = 500 + 35(P/F,i,30) + 350(P/F,i10,3)$

Are you CERTAIN there is Annual Maintenance in a Resurfacing year?
• May 10th 2008, 02:22 PM
jason03
The annaul maintence is every year and the resurfacing is once every 10 years.....

but I dont believe there would be annaul maintence in a resurfacing year.

The P/F notation is used when you are trying to Find P knowing F

(tables)

Finding Present worth, knowing the Future value....

so if you know P, the interest, and the number of years you can look on the table and just plug and chug....