The acquisition cost of a bus is $100,000. The trend in operating costs can be given...
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The acquisition cost of a bus is $100,000. The trend in operating costs can be given by the equation $/km 0.5 + 5 x 10-6 d where d is the number of kilometers traveled from new. A bus travels an average of 80,000 km per year, and it does not depend on the bus's age. The trend in resale value for a bus in its first 5 years of life is given in Table 4.22. TABLE 4.22 Bus Resale Values Year 1 2 3 34 4 5 Resale Value ($) 75,000 60,000 30,000 10,000 5000 a. Making appropriate assumptions, construct a model that could be used to determine the economic life of a bus. b. Using the model constructed in (a), along with previous data, and taking i to be 10% per annum, what is the economic life of a bus? The acquisition cost of a bus is $100,000. The trend in operating costs can be given by the equation $/km 0.5 + 5 x 10-6 d where d is the number of kilometers traveled from new. A bus travels an average of 80,000 km per year, and it does not depend on the bus's age. The trend in resale value for a bus in its first 5 years of life is given in Table 4.22. TABLE 4.22 Bus Resale Values Year 1 2 3 34 4 5 Resale Value ($) 75,000 60,000 30,000 10,000 5000 a. Making appropriate assumptions, construct a model that could be used to determine the economic life of a bus. b. Using the model constructed in (a), along with previous data, and taking i to be 10% per annum, what is the economic life of a bus?
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a Making appropriate assumptions construct a model that could be used to determine the economic life of a bus ANSWER The economic life of a bus is the ... View the full answer
Related Book For
University Physics with Modern Physics
ISBN: 978-0321501219
12th Edition
Authors: Hugh D. Young, Roger A. Freedman, Lewis Ford
Posted Date:
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