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What is the equivalent annual cost in years 1 through 10 of a contract that has a first cost of $76,000 in year O and annual
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Answer #1

Equivalent Annual costs = 76000(A/P,9,10) + 18000(P/A,9,8) (P/F,9,2) (A/P,9,10)

Using DCIF Tables

Equivalent Annual costs = 76000(0.1558) + 18000(5.535) (0.8417) (0.1558)

Equivalent Annual costs = $24905.97 = $24906

The equivalent annual cost determined to be $24906

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