Question

It cost $4000 to operate and maintain in the first year and $3000 in each later year. At the end of 4 years, the firm changed their inspection procedure, eliminating the need for these technologies. The purchasing agent was very fortunate to sell these technologies for $60,000, the original price. Compute the equivalent uniform annual cost during 4 years the technologies were used.

Answer 1

Answer: $(A+B)

Explanation:

$4,000 to operate and maintain for the first year, $3000 in the later years and later sold at $60,000.

Assuming the initial cost of this technologies is X, also, let's say the interest per year is y%.

Therefore, the net first year cost= $(X+4,000).

So, the total first year cost= $(X+4,000)(1+y/100)^4 = $ A

The total cost of operations and maintainance for the remaining years(3 years) is;

$ 3,000 (1+y/100)^3

= $ B.

Therefore, the total cost = $(A+B)