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My question is as follows:

1.) An earth compactor costs $38,000 and has an economic life of 9 years. However, the purchaser needs it for only 1 project that will be completed in 3 years. At the end of the project, it can be sold for 1/2 its purchase price. What is the annual cost to the owner if the required rate of return is 12%? Economics for Engineers has been the bane of my existence.

Thank you so much for any help you can provide.

3 Answers 3