Homework Answers
Initial Cost=C=$92000
Interest rate=i=14%
Annual Maintenance Cost=AMC=$8000
Annualized overhaul cost=AHC=24000*(F/P,14%,4)*(A/P,14%,4)
Let us calculate interest factor
(F/P,14%,4)=1/(1+14%)^4=0.592080
Annualized overhaul cost=AHC=24000*0.592080*0.343205=$4876.9156
Capitalized equivalent cost=C+(AMC+AHC)/i=92000+(8000+4876.9156)/0.14 =183977.97
or say
Capitalized equivalent cost=$184 thousand
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