A delivery truck has the book value of $10,000 in year 5. The purchase price of...
A delivery truck has the book value of $10,000 in year 5. The purchase price of the truck is $30,000. If the minimum acceptable rate of return is 10%, what is the equivalent annual capital cost of the truck in year 7?
Homework Answers
Annual equivalent cost in year 7 = (initial cost - book value(P/F, 10%, 5))(A/P, 10%, 7)
= (30000 - 10000*0.62092)*(0.2054)
= $4,886.63
Hence, the equivalent annual capital cost of the truck in year 7 is $4,886.63.
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