In: Civil Engineering
Skyward Construction has just purchased a new D9 bulldozer for
$675,000. The annual insurance is $7,000. The annual maintenance
cost for the first 4 years is $12,500, at which time the equipment
is given a major overhaul for $75,000. For the next 4 years the
annual maintenance cost is $22,500. At that time the piece has a
salvage value of $100,000. Draw the cash flow diagram. What is the
present value of the investment? What is the EUAC? Assume a 5.%
annual inflation rate.
New D9 bulldozer = $675,000
Annual insurance = $7,000
Annual maintainance cost for first four years = $12,500
Present Value of Investment:
Present value = = 675000 + 45242.489 + 44324.381 + 61702.686 + 65638.400 - 67683.936 = $ 824224.02
EUAC:
EUAC = = $ 127525.435