Tunnel needs major maintenance work that is anticipated every 12 years at cost of 6000 per...

Tunnel needs major maintenance work that is anticipated every 12 years at cost of 6000 per occurrence. if tunnel has expected life of 120 years, what is its economic equivalent annual cost with interest rate of 9%?

Solutions

Expert Solution

Total Cost = 6000/12 * 120

= 60,000

Equivalent Annual Cost = Total Cost / PVIFA(9%, 120)

PVIFA = (1 - 1/(1.09)¹²⁰)/0.09

= 11.1108

NOW,

EAC = 60000 / 11.1108

= 5,400.15

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

the KIA company needs 6000 car tires per year. the ordering cost for these is 120$...

the KIA company needs 6000 car tires per year. the ordering cost for these is 120$ per order and the holding cost is assumed to be 50% of the per unit cost. in orders of less than 225 tires cost $80. for orders of 225 or more, the cost drops to $70 per unit. should KIA take advantage of the quantity discount?

A debt must be settled in two years, through payments of 6000 dollars every two months...

A debt must be settled in two years, through payments of 6000 dollars every two months overdue. The debtor agrees with his creditor to restructure the debt liquidating the debt in 3 years and a half with equal monthly payments due. Calculate the value of the new payments, if the The effective interest rate is 13% per annum.

How much does signboard maintenance cost per year?

Use rules of inference to show that the hypotheses “Every student in Computer science major needs...

Use rules of inference to show that the hypotheses “Every student in Computer science major needs to take CSCI2000,” “Every student who takes CSCI2000 knows how to program in JAVA” imply the conclusion “Every student in Computer science major knows how to program in JAVA.”

A company has the project costs $50,000 now and $6000 per year for 7 years beginning...

A company has the project costs $50,000 now and $6000 per year for 7 years beginning 1 year from now with increases of 8% per year thereafter for the next 9 years. Calculate a project’s present worth with a real interest rate of 10% per year and an inflation rate of 4% per year.

A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for 5-years....

A widget machine will cost $480,000. The anticipated increase in revenue will be $140,000/year for 5-years. Annual expenses will be $30,000/year for 5-years. The depreciable life is estimated to be 5-years and the salvage value will equal $35,000. Additional inventory necessary to run the machine will be $26,000. Initial training expenses are $20,000. Tax rate equals 40%. A. Find the discounted payback and convert this into a percentage.

The maintenance cost for a certain machine is 1500 TL per year for the first 5...

The maintenance cost for a certain machine is 1500 TL per year for the first 5 years (from n=1 to n=5), 2200 TL in year 6, and from year 7 until year 35 the maintenance cost per year increases 6% with respect to the amount of the previous year. At an interest rate of 8% per year, what is the equivalent equal payment series?

12 - What is target cost per unit? A.Target cost per unit is the average total...

12 - What is target cost per unit? A.Target cost per unit is the average total unit cost over the product's life cycle. B.Target cost per unit is the average total unit cost over the contribution margin ratio. C.Target cost per unit is the contribution margin per unit over the average total unit cost. D.Target cost per unit is the variable unit cost over the product's life cycle. 13 - What is value engineering? A.Charging different prices to different customers...

For each of 12 organizations, the cost of operation per client was found. The 12 scores...

For each of 12 organizations, the cost of operation per client was found. The 12 scores have a mean of $2133 and a standard deviation of $345. Assume the population of cost of operation per client follows a normal model. Compute and interpret a 90% CI for the mean cost of operation for all such organizations Need by 3pm pacific today! thank you!!

If an insurance company offers you annuity payments of $45,000 per year for the first 12 years of retirement and $52,000 per year for the next 12 years

If an insurance company offers you annuity payments of $45,000 per year for the first 12 years of retirement and $52,000 per year for the next 12 years, what would you be willing to pay for this annuity if you have a required rate of return of 6%? Assume beginning of year payments

Subjects