A project has a first cost of $75,000, operating and maintenance costs of $10,000 during each year of its 8 year life, and a $15,000 salvage value. What is its equivalent uniform annual cost (EUAC) if the interest rate is 12%?

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
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6-9
A project has a first cost of $75,000, operating and maintenance costs of $10,000 during each year
of its 8 year life, and a $15,000 salvage value. What is its equivalent uniform annual cost (EUAC)
if the interest rate is 12%?
Solution
EUAC = 75,000(A/P, 12%, 8)
10,000 - 15,000(A/F, 12%, 8)= $23,878.00
Transcribed Image Text:6-9 A project has a first cost of $75,000, operating and maintenance costs of $10,000 during each year of its 8 year life, and a $15,000 salvage value. What is its equivalent uniform annual cost (EUAC) if the interest rate is 12%? Solution EUAC = 75,000(A/P, 12%, 8) 10,000 - 15,000(A/F, 12%, 8)= $23,878.00
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