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Hi sir, i would like to ask regarding the past year question of Melanie Co.
I have got different answer from the scheme which only give difference of $2,746.
Is it correct if my working like stated below? because I think there’s no difference in terms of method on calculation. Correct me if I’m wrong sir.
THREE YEARS
0 Cost -160,000 1.000 -160,000
1-3 Maintenance cost -8,000 2.486 -19,888
3 Residual value 40,000 0.751 27,320TOTAL NPV -152,568
EAC= 152,568/2.486=-61,371
I have used the same method to calculate for four years. It could be appreciate if you could give your view regarding this matter. Thank you so much sir 🙂
What you are doing would have been correct except that the present value of the residual value is not 27,320.
40,000 x 0.751 = 30,040 (not 27,320)
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