A delivery car had a first cost of $30,000, an annual operating cost of $14,000, and an estimated $7500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 4 years and must be sold now as a used vehicle. At an interest rate of 14% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle?
The market value of the used vehicle is determined to be______ $
Present Value of Total cost = First cost + Present value of Operating Cost - Present value of salvage value
= 30000 + 14000*(1-(1+14%)^-6)/14% - 7500/(1+14%)^6
= 81,024
AW value = Present Value of Total cost/PVA (14%,6)
AW value = 81,024/((1-(1+14%)^-6)/14%)
= 20,836
If AW value are same in case of the car will be retained for only 4 years
AW value = 20,836
Present value of Total cost in case car is held for 4 year = AW value *(1-(1+r)^-n)/r
Present value of Total cost in case car is held for 4 year = 20,836*(1-(1+14%)^-4)/14%
= 60,710
Market value of the used vehicle is determined to be = (Car Cost + Present value of Operating Cost - Present value of Total cost in case car is held for 4 year )*(1+r)^n
= (30000+14000*(1-(1+14%)^-4)/14% - 60710)*(1+14%)^4
= $17,028
A delivery car had a first cost of $30,000, an annual operating cost of $14,000, and...
delivery car A delivery car had a first cost of $36,000, an annual operating cost of $16,000, and an estimated $6500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 8% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the...
A delivery car had a first cost of $36,000, an annual operating cost of $17,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 9% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
A delivery car had a first cost of $34,000, an annual operating cost of $15,000, and an estimated $5000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 8% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
A delivery car had a first cost of $32,000, an annual operating cost of $19,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 12% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
A delivery car had a first cost of $38,000, an annual operating cost of $13,000, and an estimated $7000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 10% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
A delivery car had a first cost of $38,000, an annual operating cost of $13,000, and an estimated $6500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 13% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
A delivery car had a first cost of $32,000, an annual operating cost of $15,000, and an estimated $6000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 11% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if...
Problem 06.004 Annual Worth and Capital Recovery Calculations A delivery car had a first cost of $32,000, an annual operating cost of $13,000, and an estimated $7000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 8% per year, what must the market value of the used vehicle be in order for its AW value...
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?
A large standby electricity generator in a hospital operating room has a first cost of $72,750 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S=72,750(1 - 0.15)", where n is the number of years after purchase. The operating cost of the generator will be constant at $6,000 per year, and the interest rate is 12% per year. Determine the economic service life and associated...