Calculate the perpetual equivalent annual cost (years 1 to ∞) of $1,000,000 now and $725,000, 5...

Question

Question

Calculate the perpetual equivalent annual cost (years 1 to ∞) of $1,000,000 now and $725,000, 5 years from now at an interest rate of 8% per year.

business economics

Answer 1

Answer #1

perpetual equivalent annual cost = 1000000 * 0.08 + 725000 * (P/F,8%,5)* 0.08

= 1000000 * 0.08 + 725000 *0.680583* 0.08

= 119473.81 ~ 119474 (Nearest Dollar)

Answer 2

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