What is the life cycle cost of a vehicle under the following scenario: Initial cost is $50,000. Maintenance cost is $2500/yr. The maintenance increases $500/yr starting in year 5. The car is sold in year 10 for $10,000. The interest rate is 4%/yr. PLEASE INCLUDE A CASH FLOW DIAGRAM or I will not rate. Thank you!
Year | Initial cost | Annual cost | Resale value | Net Cash flow | Discount factor | Present value |
0 | -50000 | -50000 | 1.00000 | -50000.00 | ||
1 | -2500 | -2500 | 0.96154 | -2403.85 | ||
2 | -2500 | -2500 | 0.92456 | -2311.39 | ||
3 | -2500 | -2500 | 0.88900 | -2222.49 | ||
4 | -2500 | -2500 | 0.85480 | -2137.01 | ||
5 | -2500 | -2500 | 0.82193 | -2054.82 | ||
6 | -3000 | -3000 | 0.79031 | -2370.94 | ||
7 | -3500 | -3500 | 0.75992 | -2659.71 | ||
8 | -4000 | -4000 | 0.73069 | -2922.76 | ||
9 | -4500 | -4500 | 0.70259 | -3161.64 | ||
10 | -5000 | 10000 | 5000 | 0.67556 | 3377.82 | |
Present value | -68866.79 |
Life cycle cost = 68867
Cash flow diagram
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