An alternative has a discounted project cost of $12,345,000 with a discounted salvage value of $1,750,000. The estimate was in constant dollars and the discounting used end-of-year factors. While the period of analysis is 5 years, the alternative only provides benefits for the last 4 years. Calculate the uniform annual cost.
Step 1. First we need check the factors table in the textbook with 5 year project.
5 Year Project
Project Constant Dollars Current ...
The solution gives detailed steps on calculating uniform annual cost using constant dollars and end-of-year factors.
Calculating Equivalent Uniform Annual Cost: Example Problem
Please see the attached file.
Your County is planning to build a park. The initial cost for the park will amount to $6,500,000. Annual maintenance and repairs will amount to:
$25,000 for each of the first five years,
$30,000 for each of the next ten years and,
$35,000 for each of the next five years.
In addition, a major overhaul costing $500,000 will be required at the end of the tenth year.
a) Use a constant interest rate of 5% and determine the equivalent uniform annual cost for a 20-year period.View Full Posting Details