View the step-by-step solution to:

You are evaluating the purchase of a vehicle for your business.

You are evaluating the purchase of a vehicle for your business. You've decided that the best choice is a car that will cost you $35,000, but you're uncertain how long you should plan on holding the car before you replace it. The table below lists the running costs and salvage value of the vehicle for each year.

12345Running Costs-3000-3500-4000-4500-5000Salvage Value25000 20000 15000 10000 5000

What is the annual equivalent cost of replacing the vehicle every 5 years? Assume your cost of capital is 10.5%. Enter your answer to the nearest cent. Ignore taxes.

(Your answer will be a cost, and therefore a negative number. Don't forget the minus sign.) 

Top Answer

Annual equivalent cost = - $46 , 564 . 33 / 3 .... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.


Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online