A delivery car had a first cost of $30,000, an annual operating cost of $15,000, and an estimated $3000 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 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 $_.

A delivery car had a first cost of $30,000, an annual operating cost of $15,000, and an estimated $3000 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 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 $_.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of nine years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. a. What will the depreciation charge be in year nine? b. What is the book value at the end of year eight? c. What is the gain (or loss) on the disposal of the device if it is sold for $3,200 after eight years? a. The depreciation charge in year nine will be $. (Round to the nearest dollar.)

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