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You have installed a solar heating system which cost $15,000 and has an estimated usable life of 10 years. At the end of its usable life, the components have a scrap value of $2,000. Assuming no inflation and an interest rate of 6%, what uniform annual amount must be invested at the end of each of the 10 years to be able to replace the system at the end of life? Please show calculation in Excel. I want to learn how to do this.Show more…
Added by Leah C.
Step 1
PV(replacement cost) = FV(replacement cost) / (1 + r)^n where FV(replacement cost) is the future value of the replacement cost, r is the interest rate, and n is the number of years. In this case, the replacement cost is $15,000 - $2,000 = $13,000. PV(replacement Show more…
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