A delivery car had a first cost of $30,000, an
Chapter 6, Problem 6.4(choose chapter or problem)
A delivery car had a first cost of $30,000, an annualoperating cost of $12,000, and an estimated$4000 salvage value after its 6-year life. Due toan economic slowdown, the car will be retainedfor only 2 years and must be sold now as a usedvehicle.(a) At an interest rate of 10% per year, what mustthe market value of the 2-year-old vehicle bein order for its AW value to be the same asthe AW for a full 6-year life cycle?(b) Compare your answer in (a) with the firstcost and expected salvage after 6 years. Is therequired market value a reasonable one, inyour opinion?
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