Economics Uniform Equivalent Annual Cost Question
The answer is $500,000 dollars. I am looking for the work that leads up to that. I believe you have to use present value but I’m not sure. Help is much appreciated.
———————————————————————-
Need assignment help for this question?
If you need assistance with writing your essay, we are ready to help you!
OUR PROCESS
Order
Payment
Writing
Delivery
Why Choose Us: Cost-efficiency, Plagiarism free, Money Back Guarantee, On-time Delivery, Total Сonfidentiality, 24/7 Support, 100% originality
1. An oil transfer pump that costs $1,000,000 is expected to have a 3 year life, at which time it will have to be replaced with the same pump costing the same amount. Maintenance costs will increase each year. The cost per year is shown in the following table (including the purchase cost at time 0). Assume the maintenance costs occur at the end of each year and that each year is 1 year long. Use a 13%/annum interest rate. What is the uniform equivalent annual cost (UEAC) for the pump if we assume the UEAC occurs at the end of each year:
|
Year |
Cost |
|
0 |
1,000,000 |
|
1 |
50,000 |
|
2 |
75,000 |
|
3 |
96,513 |
