Question

can you detail explain how solved: "is just to practice" and make sure I have same answer

You are deputy chief of the Space Federation Force (SFF), which means you do whatever the chief of the SFF says. She says you evaluate at 10% per year unless told otherwise.

Space Fuel Inc. is considering establishing a new propellant depot to provide space vehicles a refueling point in their trek to Mars. If placed in a LaGrange point, the depot could save $50,000K annually. The depot can be constructed for $200,000K today and will be used for a period of 10 years. It has a salvage value of $10,000K at the end of its useful life. The new depot will require an annual maintenance cost of $9,000K. Capital financing is available at _6__% per quater compounded <any value>

Answer 1

The cost of purchasing the new depot as of today is 200,000K .

If the deposit is purchased by taking capital financing is as below:

Particulars	Amount
Savings	50,000
Depreciation (Note-1)	-19,000
Annual Maintainence cost	-9,000
Cost of capital (Note-2)	-52,480
Total cost per annum	-30,480
Annuity @ 10% p.a (Note - 3)	6.144567106
Total cash outflow at end of 10th year	-1,87,286.41
Salvage Value at the end of year 10	10000
Total cash outflow if capital financing obtained	-1,77,286.41
Total cashflow if principal amount paid on day one	-2,00,000
Net Savings	22,713.29

Note-1:

Particulars	Amount
Cost of depot	2,00,000.00
Salvage value	10000
Total life	10
Depreciation	19000

Note-2:

Compound Interest:
Quarter -1	1.0600
Quarter -2	1.1236
Quarter -3	1.1910
Quarter -4	1.2624
Principal	200000
Annual Interest rate	26.24%
Interest cost	52480

Note - 3:

Annuity @ 10% p.a
Year -1	0.91
Year -2	0.83
Year -3	0.75
Year -4	0.68
Year -5	0.62
Year -6	0.56
Year -7	0.51
Year -8	0.47
Year -9	0.42
Year -10	0.39
Total	6.14