The costs associated with a small X ray inspection system are $40,000 now and $24,000 per year, with a $6000 salvage value after 3 years Determine the equivalent cost of the system if the real interest rate is 10 per year and the inflation rate is 4 per year ...

The Answer is in the image, click to view ...

The costs associated with a small X-ray inspection system are $40,000 now and $24,000 per year, with

Question:

The costs associated with a small X-ray inspection system are $40,000 now and $24,000 per year, with a $6000 after 3 years. Determine the equivalent cost of the system if the real interest rate is 10% per year and the inflation rate is 4% 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...