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I am trying to solve a rate of return question from the book Engineering Economics by R. Paneerselvam. In that particular problem I am given a salvage value along with other factors. following are the factors:

i) Initial cost

ii) Annual incremental revenue

iii) Life

iv) Life-end Salvage value (Rs.)

Now when salvage value is not given we use the following formula:

$PW_n(i) = -P + A(P/A,i,n)$

Now how will this formula be modified when salvage value is also added? I mean will the factor F/P be multiplied with Salvage Value or P/F?

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