You are considering purchasing a dump truck The truck will c

You are considering purchasing a dump truck. The truck will cost S63,000 and have operating and maintenance costs that start at $19,000 the first year and increases by $3,000 per year. Assume that the salvage value at the end of five years is $25,000 and interest rate is 7%. What is the equivalent annual cost of owning and operating the truck for five years? R Click the icon to view the interest factors for discrete compounding when i-7% per year. The equivalent annual cost of owning and operating the truck is $(Round to the nearest dollar.) 1 More Info ingle Payment ual Payment Series Gradient Series Capital Recovery ?? (AP, i, N) 1.0700 0.5531 0.3811 0.2952 0.2439 Compound Present Compound Sinking Present Worth Gradient Gradient Worth Factor (P/F i, N) 0.9346 0.8734 0.8163 0.7629 0.7130 Fund Amount Factor (FIA, i, N) 1.0000 2.0700 3.2149 4.4399 5.7507 Present Worth Amount Factor (FIP i, N) 1.0700 1.1449 1.2250 1.3108 1.4026 (A/F, i, N) 1.0000 0.4831 0.3111 0.2252 0.1739 Uniform Series (A/G, i, N) 0.0000 0.4831 0.9549 1.4155 1.8650 (P/G, ?N) (PIA, i, N) 0.9346 1.8080 2.6243 3.3872 4.1002 0.0000 0.8734 2.5060 4.7947 7.6467 4 5 1.5007 1.6058 1.7182 1.8385 1.9672 7.1533 8.6540 10.2598 11.9780 13.8164 4.7665 5.3893 5.9713 6.5152 7.0236 2.3032 2.7304 3.1465 3.5517 3.9461 0.1398 0.2098 0.6663 0.6227 0.5820 0.5439 0.5083 0.1675 0.1535 0.1424 10.9784 14.7149 18.7889 23.1404 27.7156 8 0.0975 0.0835 0.0724 9 Enter your answer in the answer box

Solution

Year Cash flows PVf @ 7% Present Value 0 -63000 1 -63000 1 -19000 0.934579 -17757.01 2 -22000 0.873439 -19215.65 3 -25000 0.816298 -20407.45 4 -28000 0.762895 -21361.07 5 -6000 0.712986 -4277.917 Present Worth of cash outflows -146019 Divide: Annuity factor 4.1002 Equivalent Annual cost -35612.65