Your company purchased a D12 bulldozer for $2 200 000 for use on a project in...

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Your company purchased a D12 bulldozer for $2 200 000 for use on a project in Califonia. Maintenance costs for the first year of service is estimated at $8 000, followed by $8 500 for the second year. Thereafter, this cost increases yearly with an amount of $1 500 for the next 5 years. a) use interest of 14% and calculate the equivalent yearly maintenance cost over ths 7 year period. b) since the estimated life cycle of this machine is 7 years, the yearly income is estimated at a flat rate of $300 000 per year, and the resale value at the end of the life cycle is $ 1 500 000 would you recommend the purchase? calculate the Net Present Value, Equivalent Annual Cost and future value analyses as proof. May use interest tables Your company purchased a D12 bulldozer for $2 200 000 for use on a project in Califonia. Maintenance costs for the first year of service is estimated at $8 000, followed by $8 500 for the second year. Thereafter, this cost increases yearly with an amount of $1 500 for the next 5 years. a) use interest of 14% and calculate the equivalent yearly maintenance cost over ths 7 year period. b) since the estimated life cycle of this machine is 7 years, the yearly income is estimated at a flat rate of $300 000 per year, and the resale value at the end of the life cycle is $ 1 500 000 would you recommend the purchase? calculate the Net Present Value, Equivalent Annual Cost and future value analyses as proof. May use interest tables

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a To calculate the equivalent yearly maintenance cost over the 7year period we need to first calcula... View the full answer