23. What is the capitaized cost of the maintenance costs fromn year 11 to the end of the life of the warehouse? a)$ 96,376 c) $ 250,000 b) $ 160,384 d) S 355,197 24. What is the capitalized cost of painting the warehouse? a) S 9,021 c)$ 28,296 b) $ 23.400 d) $ 31,129
Homework Answers
23 capitalized cost of maintenance at end of 10 years = 25,000/0.10 = 250,000
capitalized cost now = 250,000/(1.10 ^ 10) ~ 96,375
24 equivalent cost per year needs to be calculated
N = 12, FV = 0, PV = -50,000, rate = 10%
use PMT function in Excel
equivalent cost per year from end of year 10 = 7338.1658
value of these costs at the end of year 9 = 7338.1658/0.10= 73,381.66
value today = 73,381.66/1.1^9 ~ 31,129
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