D Question 7 25 pts 7b What is the annual Capital Recovery

D | Question 7 25 pts (7b) What is the annual Capital Recovery Cost (lease) for a Machine with an Initial purchase price of $40,000, an install cost of $4,000, an Annual maintenance cost of $2,500, a Salvage (residual) value of $8,000 5 years later. Assume that your annual MARR is 12%. O 12952 O 10947 O 12252 O 11939

Solution

Present worth of project =44000+2500/1.12+2500/1.12^2+2500/1.12^3+2500/1.12^4+2500/1.12^5-8000/1.12^5=44000+9011.9-4539.4=-48472.54

Annual capital recovery cost=P(i*(1+i)^n)/((1+i)^n-1) insert P=48472; i=12% & n = 5 years

Then our answer is 12952