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A steel workshop of initial cost of X
A steel workshop of initial cost of X. The expected annual revenue is Y during the useful life which is 18 years, i=6%. [26marks] a. Calculate the Equivalent Future Value for this investment. b. Calculate the equivalent annual Value, if there is rehabilitation cost of 10000 OR at the 10th year, additional to the information in 1. c. Calculate the Equivalent Present Value it the operating and maintenance cost for the first 10 years is 2000 OR and for the remaining 7 years of the useful life is 1200 OR, additional to the information in 1. BEL X Initial cost Annual revenues 50200 7300 Drous SIM @ o Pr
Expert Solution
a) Equivalent Future value =-50200(F/P,6%,18)+7300(F/A,6%,18) =-50200*2.854+7300*30.906 =-143,270.8+225,613.8=82343.
b) Equivalent Annual value=-50200(A/P,6%,18)+7300-10000(P/F,6%,10)(A/P,6%,18)
=-50200*0.0924+7300-10000*0.5584*0.0924=-4638.48+7300-515.9616=2145.56
c) Equivalent Present value=-50200+7300(P/A,6%,18)-2000(P/A,6%,10)-1200(P/A,6%,7)(P/F,6%,10)
=-50200+7300*10.828-2000*7.360-1200*5.582*0.5584=-50200+79044.4-14720-3740.39=10,384.01
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