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
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?