Question

A Car costs $30,000. Operating costs are $3000 the first year and increase by $1,000 each subsequent year. Its market value declines by 35% annually. At a MARR of 10%, what is the economic service life of this Car and associated annual equivalent cost?

Answer 1

Thus economic service life of the car is 9 years and associated annual equivalent cost is $11534.3

Answler Lite Vear Savege Value Totar EAC EAC (A+8) Aecevery Cest 0M (8) $19500 $13500 $1,250.2 $2000 $16S00 3000 2 $12675 $14726 2 4000 $3476 3 $82.38-75 $9574.1 $8937 $13511-1 SCoo $$3.55.187 $8311 Go00 #438 3/2692 $3480-872 $12153.8 $7343-8 $4810 F00 $2262-562 8000 $11818-8 $6594-8 $5224 7- $19y30.669 9000 $5622 $6007 $1,629 $955-9.39 $6004 1occо $55385 $11542-S $621.35p S34-3 $1,580.71itia $1 66 9.8 $6372 пасо $S162.3 12 C0o $403-882 426 2-523 10 $6725 $4885-7 $7069 1Зсоо EA.C=Egaatent Equvalent Annual Cast Since the minimum Total EAC is in Year 9.Thus,the Caa sboud be Sold atter year 9 WK Thus, Yielding a 9 years ECononic Libe Calculating CapialAccevey Cest $30000(ALe, 10, 9years)- $621.354 (AE, I0%, 9ears) a .30000(01736)- $621-354(0.0736) $5162.3 year g Notes fAP,10%, 9Y) & (A/E10%ay) Can be found in Compound Inteuert factorstabe uder uniboYm payment Series likewise we have to Caleulate for Year, oill Results as Shoon in table Cfesating Maiotenane 3000t looo(NG,107,9years) 3000 + 1000 (3.379) $6372 Calculating EA C 08M EAC 0&M (year 9 Yote's (A14IOY 9Y)Can be feCand in teopund Tnterest factons table under ATthematic Crot kewice we have to Cal Culate for eveay year, wiy aesults as Shown in Table