Il occur in a 6-year cycle as shown below, 2 3 End of Year: Maintenance: 1 $35,000 $35,000 $35,000 ompute the Equivalent Annual Cost of the int: Don't insert the negative sign

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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A tunnel to transport water initially cost $1,000,000 and has expected maintenance costs that
will occur in a 6-year cycle as shown below, assume MARR is 5% per year.
End of Year:
2
4
6.
Maintenance:
$35,000
$35,000
$35,000
$45,000
$45,000
$60,000
Compute the Equivalent Annual Cost of the maintenance.
Hint: Don't insert the negative sign
Compute the Capitalized Cost?
Hint: Don't insert the negative sign
Transcribed Image Text:A tunnel to transport water initially cost $1,000,000 and has expected maintenance costs that will occur in a 6-year cycle as shown below, assume MARR is 5% per year. End of Year: 2 4 6. Maintenance: $35,000 $35,000 $35,000 $45,000 $45,000 $60,000 Compute the Equivalent Annual Cost of the maintenance. Hint: Don't insert the negative sign Compute the Capitalized Cost? Hint: Don't insert the negative sign
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