Homework Answers
Capital recovery = (Purchase price – Salvage value) (A/P, Interest rate, Years) + Salvage value × Interest rate
= (30,000 – 8,000) (A/P, 15%, 5) + 8,000 × 15%
= 22,000 × 0.2983 + 1,200 [the factor, 0.2983, is from the compound interest table]
= 6,562.60 + 1,200
= 7,762.60
Note: annual operating cost is not relevant here.
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