Question

Eight years ago, Ohio Valley Trucking purchased a large-capacity dump truck for $115,000 to provide short-haul earthmoving services. The company sold it today for $45,000. Operating and mainte- nance costs averaged $10,500 per year. A complete overhaul at the end of year 4 cost an extra $3600. Calculate the annual cost of the truck at 8% per year interest.

both excel and hand solutions , please capture the excel solution.

Answer 1

EUAC = 115000*(A/P,8%,8) +10500 + 3600*(P/F,8%,4) * (A/P,8%,8) - 45000*(A/F,8%,8)

= 115000*0.174014 +10500 + 3600*0.735029 * 0.174014 - 45000*0.094014

= 26741.495

Excel solution

Year	Cash Flow
0	-1,15,000.00
1	-10,500.00
2	-10,500.00
3	-10,500.00
4	-14,100.00
5	-10,500.00
6	-10,500.00
7	-10,500.00
8	34,500.00
NPV	-1,53,673.72
EUAC	26,741.49

Showing formula

	Cash Flow
0	-115000
1	-10500
2	-10500
3	-10500
4	=-3600-10500
5	-10500
6	-10500
7	-10500
8	=45000-10500
NPV	=NPV(8%,N9:N16)+N8
EUAC	=PMT(8%,8,N17)