Let the power plant equipment in question #01 has a useful life of 25 years and salvage value of 200

Sociology Dec 09, 2021

Let the power plant equipment in question #01 has a useful life of 25 years and salvage value of 200.000 Pkr, and after 25 years estimated cost of the new equipment is 2000.000 Pkr. Assume at year 4 500,000 Pkr is set aside in bank account to replace the equipment after 5 years. What extra amount should be set aside annually for the replacement of equipment after 25 years. Also draw the cash-flow diagram. Assume interest rate of 10%. (Hint: sinking fund+single payment methods).