Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save $10,000 per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county’s MARR is 6% per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years?
Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save $10,000 per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county’s MARR is 6% per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years?
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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Anderson County has 35 older-model school buses that will be salvaged for $5,000 each. These buses cost $144,000 per year for fuel and maintenance. Now the county will purchase 35 new school buses for $40,000 each. They will travel an average of 2,000 miles per day for a total of 360,000 miles per year. These new buses will save $10,000 per year in fuel (compared with the older buses) for the entire group of 35 buses. If the new buses will be driven for 15 years and the county’s MARR is 6% per year, what is the equivalent uniform annual cost of the new buses if they have negligible market value after 15 years?
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