A company spends $120,000 on equipment. The annual benefit is $1,850. The company spends $13,000 and...

A company spends $120,000 on equipment. The annual benefit is $1,850. The company spends $13,000 and $16,500, at the end of 3 years and 5 years. And, lastly salvaged with $27,000 at the end of it's 8 year life. After 8 years the company wants to find EUAB over 8 years. How much is it?

Int. rate = 9%

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Expert Solution

EUAB : Equivalent Uniform Anuual Benefit

= Annual Benefit +[ Salvage value (A/F , i, t ) ]

Given ,

Annual Benefit = $ 1850

Salvaged Value = $ 27000

Life = 8 years

Intt Rate = 9%

EUAB = $ 1850 + [ 27000*( A/F, 9%, 8)]

= $1850 + ( 27000 * .0907)

= $1850 + 24489

= $ 26339

Hence , The Equivalent Uniform annual benefits is $ 26339

Rahul Sunny answered 2 years ago

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