Stritch operates a fleet of vans and is considering whether to replace the vehicles on a L or 2 year cycle. Each vehicle costs €72,000. The following operating costs per vehicle for each year and the resale value at the end of each year are as follows: 17. Year 1 Year 2 € € Operating costs Resale value 7,200 20,000 10,400 12,000 The cost of capital is 10% per annum. What is the equivalent annual cost of replacing the vehicles every two years?

Stritch operates a fleet of vans and is considering whether to replace the vehicles on a L or 2 year cycle. Each vehicle costs €72,000. The following operating costs per vehicle for each year and the resale value at the end of each year are as follows: 17. Year 1 Year 2 € € Operating costs Resale value 7,200 20,000 10,400 12,000 The cost of capital is 10% per annum. What is the equivalent annual cost of replacing the vehicles every two years?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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