National Council of Examiners for Engineering and Surveying (NCEES) Fundamentals of Engineering (FE) Industrial and Systems Practice Exam

To calculate the present worth of the new sander, we need to take into account both the initial cost and the annual maintenance costs. The initial cost of $3,600 is a cash outflow that occurs at the present time, thus it is already expressed in present worth terms. The annual maintenance cost of $400 needs to be considered over a certain period.

If we assume that the annual maintenance cost is to be considered over a specific time horizon, we can calculate its present worth using the formula for the present value of an annuity. This involves determining a discount rate and the number of years the maintenance will be incurred.

Let's denote:

- Initial cost = $3,600 (immediate cash outflow)

- Annual maintenance cost = $400 (recurring cash outflow)

- n = number of years (which needs specific context to determine)

Using the Present Value of an annuity formula, the present worth of the maintenance costs can be calculated. Assuming a time period of 10 years and a discount rate (for example, 10%), you would calculate the present worth of the maintenance:

\[ \text{Present Worth of Maintenance} = C \times \left( \frac{1 - (1 + r)^{-