An asset with a first cost of $20,000 has an annual operating cost of $12,000 and a

Question:

An asset with a first cost of $20,000 has an annual operating cost of $12,000 and a $4000 salvage value after its 4-year life. If the project will be needed for 6 years, what would the market (salvage) value of the 2-year-old asset have to be for the annual worth to be the same as it is for one life cycle of the asset? Use an interest rate of 10% per year.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...