What would be the present value of an item that has a salvage value of $25,000 at the end of five years? Assume a discount rate of 3.8% for an end-of-year factor. Carry calculations to four decimal places.

24,050

1) The President's Budget request included $1,345,000 for an Air Force research and development effort in FY11. The project has been delayed three years until FY14. What would be the budget request for FY14 for this effort? (Use the inflation tables at the end of the chapter.)

$1,838,790

$1,418,666

$1,431,926

$1,402,559

1431926

1,402,559

To calculate the present value of an item with a salvage value, you need to discount the salvage value to its present value at the given discount rate. Here are the steps to calculate it:

Step 1: Identify the salvage value and the discount rate.
- In this case, the salvage value is $25,000.
- The discount rate is 3.8%.

Step 2: Calculate the present value factor.
- The present value factor can be calculated using the formula: Present Value Factor = (1 + discount rate)^(-n)
- In this case, since the salvage value is at the end of five years, n = 5.
- Substituting the values: Present Value Factor = (1 + 0.038)^(-5)
- Calculate the present value factor to its full four decimal places.

Step 3: Calculate the present value.
- The present value can be calculated using the formula: Present Value = Salvage Value * Present Value Factor
- Substituting the values: Present Value = $25,000 * Present Value Factor
- Calculate the present value rounding it to four decimal places.

By following these steps, you can calculate the present value of an item with a salvage value of $25,000 at the end of five years using a discount rate of 3.8%.