Question

Weston 12 Question 6 4 points Save Answ Dubai government has decided to fund a program for improving reading Determine the equivalent annual costat an interest rate of 10% per year. is in elementary school students. The first con is $300.000 now, and an update amount of $100.000 every 5 years forever $-46,380 $-64,323 $ 46,3800 5-16,380

Answer 1

The correct answer is :- $ - 46,380

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The equivalent annual cost is calculated as follows

Equivalent annual cost = - $ 300,000 ( A/P , 10% , ∞) -  $ 100,000 ( A/F , 10% , 5 years)

Where ( A/P , 10% , ∞) = Capital recovery factor & ( A/F , 10% , 5 years) = Sinking fund factor

The capital recovery factor for an asset with infinite life is its first cost multiplied by the interest rate.

Equivalent annual cost = - $ 300,000 x 0.10 -  $ 100,000 x 0.1638

Equivalent annual cost = - $ 46,380