Consider a facility that has a 30-year life a replacement, Ask an Expert

Economics

Consider a facility that has a 30-year life, a replacement cost of $2 million, and an interest rate of 5%.

a. Calculate the annualization factor. Show your work/ calculations using the formula.

b. Based on the annualization factor, calculate the annual cost of the facility.

c. To implement the project, a new equipment is purchased at $15,000 which has a useful life of 10 years. Using the annualization factor at 4% interest rate, what is the equipment’s annual depreciation cost?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91725313

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