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Sagot :
The perpetual equivalent annual cost is $35013
The perpetual annual cost calculation
interest i = 10%
Period = n = 7 years
Formula
A/F = i/(1+i)^n-1
= 0.1/(1+0.1)^7-1
= 0.1054
The perpetual annual cost
= -250000*0.1-95000(0.1054)
= -25000-10013
= - 35013
What is the equivalent annual cost?
This is a term that is used to describe the cost of operating and maintaining an asset yearly over the entirety of the assets life.
Therefore the perpetual equivalent annual cost is $35013.
Read more on equivalent annual cost here:
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