A maintenance contract states that the annual maintenance cost is $5000 for the first 4 years and $8000 thereafter. In
Posted: Wed Mar 30, 2022 3:41 pm
A maintenance contract states that the annual maintenance cost
is $5000 for the first
4 years and $8000 thereafter. In addition, there is expected
to be a recurring upgrade
cost of $15000 every 13 years.
1- Present all steps to determine the Capitalized Cost for an
infinite sequence of
cash flows.
2- Present the numerical results associated with each step.
3- Find i (the interest rate)
for which the total capitalized
cost of the contract
will be equal to -287532 (explain in details your approach).
is $5000 for the first
4 years and $8000 thereafter. In addition, there is expected
to be a recurring upgrade
cost of $15000 every 13 years.
1- Present all steps to determine the Capitalized Cost for an
infinite sequence of
cash flows.
2- Present the numerical results associated with each step.
3- Find i (the interest rate)
for which the total capitalized
cost of the contract
will be equal to -287532 (explain in details your approach).