1. Bob bought a used vehicle for $7500. The operating cost and salvage values are given in the chart. Given an interest rate of 9%, find the economic service life. Year Operating Cost Salvage Value 1 -1200 7000 2 -900 5000 3 -700 4200 4 -500 4000 5 -200 2000
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Step 1
The present worth (PW) is calculated as follows: PW = Purchase Price + Sum of (Operating Cost / (1 + Interest Rate)^Year) - (Salvage Value / (1 + Interest Rate)^Year) For each year, we get: Show more…
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