A city government is planning to install a sewage line at a cost $10M with an estimated life of 50 years and an estimated salvage value of $2M. Assume that the line may be replaced at the same cost every 50 in perpetuity. Determine the capitalized cost if the interest rate is 9%Choose the most appropriate answer from the choices below.
A. $8.2M
B. $10.1M
C. $12M
D. None of these

Question

03-06-2021
Business

Answered

Connect with experts and get insightful answers to your questions on IDNLearn.com. Discover in-depth and trustworthy answers to all your questions from our experienced community members.

A city government is planning to install a sewage line at a cost $10M with an estimated life of 50 years and an estimated salvage value of $2M. Assume that the line may be replaced at the same cost every 50 in perpetuity. Determine the capitalized cost if the interest rate is 9%Choose the most appropriate answer from the choices below.
A. $8.2M
B. $10.1M
C. $12M
D. None of these

Sagot :

We greatly appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. For dependable answers, trust IDNLearn.com. Thank you for visiting, and we look forward to helping you again soon.

Which Of The Following Statements Accurately Describes Voting Rights In Seventeenth-century British North America?a. Only White Property-owning Men Could Vote.b

Essay26 Throughout History, The Trend Of Wearing A Beard Or Being Clean Shaven Was Often Put Inplace By A Ruler Or Religious Decree. In Your Own Words, Describe

Music Time Period Dates Discussion Some Sources Identify Music Time Periods With Slight Variation, But Research Will Show A Consistent Consensus In Determining

Which Is The Best Strategy For An Activist Or Leader To Use Social Media To Expose And Combat Misinformation? Locate The Social Media Pages Of Opponents, Read T

Question 4.25 Let Be The Vertices Of A Cube. (c) ★ How Many Noncongruent Triangles Can Be Formed By Connecting 3 Of The Vertices Of The Cube?

Esfandairi Enterprises Is Considering A New Three-year Expansion Project That Requires An Initial Fixed Asset Investment Of $2.18 Million. The Fixed Asset Will

List And Describe The Three Main Modes Of Transmission A Pathogens As Described In The Chain Of Infection.

What Are The Two Dimensions Of Financial Reporting?A) Asset And DefinitionB) Measurement And DefinitionC) Asset And MeasurementD) Measurement And ProcessE) None

Which Of The Following Does Not Accurately Describe A Partnership? Multiple Choice A. A Partnership Is A Business Entity Owned By Two Or More People. B. Stock R

A Teacher Gives A Test With Questions That Fall Into 3 Levels Of Difficulty (easy, Moderate, And Hard).Which Scoring Method Would Best Allow Her To Identify Stu

Abdulmajeedabiodunacidn Abdulmajeedabiodunacidn · Answer 1 · 2021-06-05T04:56:13-04:00

Answer:

B. $10.1M

Explanation:

The capitalized cost of this investment is the present value of the cost that has just been incurred as well as the present of the replacement asset every 50 years.

The present value of cost incurred is the same as the amount incurred since it is stated in today's terms i.e $10M

The present value of replacement asset=replacement cost/50 year effective interest rate

In 50 years' time, the old sewage line would be sold for $2M and another bought of $10M, effectively replacement is $8M($10M-$2M)

the effective interest rate for 50 years=(1+9%)^50-1=7335.75%

capitalized cost of the sewage line=$10+$8/7335.75%

capitalized cost of the sewage line=$10.1M

Sagot :

Other Questions