Answer :
Answer:
Given:
- Initial investment (Present Value) = $50,000
- Salvage value (Future Value) = $11,000
- Annual operating cost = $2,500
- Interest rate =
- Time period = 15 years
To calculate the capital recovery, we can use the formula for the annual payment in the sinking fund method:
Where:
- = Capital Recovery
- = Present Value (Initial investment)
- = Interest rate
- = Time period
Substitute the given values into the formula:
The operating cost is not directly related to the capital recovery calculation but impacts the overall profitability of the investment.
You can solve for the interest rate using numerical methods or financial calculators to find the annual capital recovery for this investment
Step-by-step explanation:
