Home task (3) GNRL 405

ALBASAM company has a first cost of $25,000, an

annual operating cost of -$6000 and a salvage value
of $5000 after 4 years.

1) Calculate the AW for one life cycles at i = 10%

2) Calculate the Capital recovery (CR) , And what is
meaning .

AW = - 25,000(A/P,10%,4) – 6000 + 5000(A/F,10%,4)

AW = - 25,000(0.31547) - 6000 + 5000(0.21547)
AW = - $12,809.4

CR = - P(A/P,i%,n) + S(A/F,i%,n)
CR = - 25,000(A/P,10%,4) + 5000(A/F,10%,4)
CR = - 25,000(0.31547) + 5000(0.21547)
CR = - 6809.4

Capital recovery (CR) is the equivalent annual

amount that an asset, process, or system must earn
each year to just recover the first cost and a stated
rate of return over its expected life Salvage