A delivery car had a first cost of $36000, an annual operating cost of $18000, and an estimated $7500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only
A delivery car had a first cost of $36000, an annual operating cost of $18000, and an estimated $7500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only
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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
Transcribed Image Text:A delivery car had a first cost of $36000,
an annual operating cost of $18000, and
an estimated $7500 salvage value after its
6-year life. Due to an economic
slowdown, the car will be retained for only
2.000 years and must be sold now as a
used vehicle. At an interest rate of 10.00%
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 $
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