With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 8% per year. Determine the RV (a) by hand solution, and (b) using a spreadsheet.
 FIGURE 1.png)
(a) By hand:
-RV(A/P,8%,3) – 60,000 + 15,000(A/F,8%,3) = -80,000(A/P,8%,5)
- [40,000 + 2000(A/G,8%,5)] + 20,000(A/F,8%,5)
-RV(0.38803) – 60,000 + 15,000(0.30803) = -80,000(0.25046)
- [40,000 + 2000(1.8465)] + 20,000(0.17046)
-0.38803 RV = -4941.05
RV = $12,734
(b) By spreadsheet:
Estimates must be entered since there is no spreadsheet function for gradients. Use
Goal Seek to find RV = $-12,732 (cell B3)
 ANSWER.png)
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