Determine the yearly cost due to depreciation under these conditions.?

Question

A piece of equipment has initial installed value of $12,000,000. It is estimated that its useful life period will be 10 years and its scrap value at the end of the useful life will be $2,000,000. The depreciation will be charged as a cost by making equal charges each year, the first payment being made at the end of the first year. The depreciation fund will be accumulated at an annual interest rate of 6%. At the end of the life period, enough money must have been accumulated to account for the decrease in equipment value. Determine the yearly cost due to depreciation under these conditions.

Answer 1

i dont have a table in front of me, but you have everything you need to solve this...

PV= $12,000,000
FV= $2,000,000
n = 10 (or is it 10-1 since the first payment is at the end of the first year?)
r = .06

look up the formula and solve!
its around 1,478,680/year (or is it $1,590,222?) you decide :)~



(you should invest in a financial calculator--hp10bII is a good one and will figure this all out for you--just a thought)