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Consider an asset with upfront cost of $12,210. The cost associated with it during the first year of operation is $6,526. The cost associated with it during the second year of operation is $10,861. With an interest rate of 0.03, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.03 and t payments is given by -) = (1-(²+)-1) (1+0)

Consider an asset with upfront cost of $12,210. The cost associated with it during the first year of operation is $6,526. The cost associated with it during the second year of operation is $10,861. With an interest rate of 0.03, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.03 and t payments is given by -) = (1-(²+)-1) (1+0)

Essentials Of Investments
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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Consider an asset with upfront cost of $12,210. The cost associated with it during the first year of operation is $6,526. The cost associated with it during the second year of operation is $10,861. With an interest rate of 0.03, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.03 and t payments is given by (1+i)* 1-(1+i) t =
Transcribed Image Text:Consider an asset with upfront cost of $12,210. The cost associated with it during the first year of operation is $6,526. The cost associated with it during the second year of operation is $10,861. With an interest rate of 0.03, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.03 and t payments is given by (1+i)* 1-(1+i) t =
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