What is the equivalent annual worth of a 20-year project that has a $2 million initial cost, annual operating costs of $66,477 and annual benefits of $294,627? Assume a discount rate of 9.1%.Enter your answer in the box below in units of $ to the nearest integer. For example, if your answer is $3,482.59 then enter 3483 as your answer. The quiz allows for a 10% margin of error, so you can round up or down.

To solve this problem, we need to calculate the equivalent annual worth (EAW) of the project. The EAW is the constant annual cash flow over a specified time period that is equivalent to a given cash flow series, considering a specified interest rate.

The EAW is calculated using the formula:

EAW = (P * A/P,i,n) + (A * A/F,i,n)

where:

• P is the present worth (initial cost of the project)
• A is the annual worth (annual benefits - annual costs)
• i is the interest rate (discount rate)
• n is the number of periods (years)

In this case:

• P = $2,000,000
• A = $294,627 -$66,477 = $228,150
• i = 9.1% = 0.091
• n = 20 years

First, we need to calculate the factors A/P and A/F using the formulas:

A/P = (i * (1 + i)^n) / ((1 + i)^n - 1) A/F = 1 / (((1 + i)^n - 1) / i)

Substituting the values:

A/P = (0.091 * (1 + 0.091)^20) / ((1 + 0.091)^20 - 1) = 0.0119 A/F = 1 / (((1 + 0.091)^20 - 1) / 0.091) = 0.0303

Then, we substitute these values into the EAW formula:

EAW = ($2,000,000 * 0.0119) + ($228,150 * 0.0303)

EAW = $23,800 +$6,913 = $30,713

So, the equivalent annual worth of the project is approximately $30,713.