Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 16

An asset with a first cost of $20,000 has an annual operating cost of $12,000 and a $4000 salvage value after its 4-year life. If the project will be needed for 6 years, what would the market (salvage) value of the 2-year-old asset have to be for the annual worth to be the same as it is for one life cycle of the asset Use an interest rate of 10% per year.