The purchasing price of the second-hand bulldozer is $100,000. It will have 8 years service life with a $5,000 salvage value. The operating cost is expected to be $4,500 in the first year, and it is estimated that the operating cost will be increasing by 10% per year thereafter. Determine the annual cost of the bulldozer at 3% per year.

The purchasing price of the second-hand bulldozer is $100,000. It will have 8 years service life with a $5,000 salvage value. The operating cost is expected to be $4,500 in the first year, and it is estimated that the operating cost will be increasing by 10% per year thereafter. Determine the annual cost of the bulldozer at 3% per year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 3P

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