Given the following the data: (a) Determine the economic service life of the asset if i =
Question:
Given the following the data:
(a) Determine the economic service life of the asset if i = 12%.
(b) Determine the economic service life of the asset if i = 20%.
(c) Assume that i = 0 and determine the economic service life of the asset mathematically (i.e., use the calculus technique for finding the minimum point.)
Transcribed Image Text:
and where I = $30,000 S22,000 - 2,000n B₁30,000 3,000n O&M₁ - = 3,000 X (1 + 0.15)"-¹ = 0.40 I = Asset purchase price Sn S₁ = Market value at the end of year n B₁ = Book value at the end of year n O&M,, = O&M cost during year n Im = Marginal tax rate
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a At i 12 the economic service life 8 years b At i 20 the economic service life 10 years c ...View the full answer
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