What is the equivalent annual cost in years 1 through 11 of a contract that has a first cost of $79,000 in year 0 and annual costs of $18,000 in years 3 through 11? Use an interest rate of 11% per year. The equivalent annual cost is determined to be $

What is the equivalent annual cost in years 1 through 11 of a contract that has a first cost of $79,000 in year 0 and annual costs of $18,000 in years 3 through 11? Use an interest rate of 11% per year. The equivalent annual cost is determined to be $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

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The equivalent annual cost is determined to be $

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