"CAPITALIZED COST, PERPETUITY. The capitalized cost, CAPCOST, ofan asset is the first cost, FIRSCOST, plus the present value of an unlimited number of replacement costs, PERPAYMN, made at each replc. interval, PAYMNINT (in months). PERPAYMN is the replc. value, REPLVALU, less any salvage or scrap value, SCRAPVAL. Thus, the capitalized cost consists of a cash payment plus the present value of a perpetuity PERPAYMN per replc. period. PRESVALU is present value of the perpetuity. INVRATE% and INVESINT are the current rate of interest on investments and its compounding period, respectively. ANNRATE% is effective annual rate % of the perpetuity. Note: intervals, day=1/30, month=1, quarter=3, semiann.=6, yearly =12, etc. Both INVESINT and PAYMNINT are in months! *** Answers to problems *** (c) Copyright PCSCC, Inc., 1993 (a) Set FIRSCOST=1500, INVESINT=12 (yearly), INVRATE%=8, PAYMNINT=60 (months, 5 yrs *12), REPLCOST=2250, SCRAPVAL=50. The capitalized cost is $6187.55. A payment of $2200 must be withdrawn every 5 years to buy a new fax machine. Type any key to exit. ||A fax machine costs $1500 and lasts 5 years at which time it has a scrap value of $50. If its replacement costs $2250 and money is worht 8%, (a) find the capitalized cost of the fax machine. Type comma key to see answers. Type (F2) to return to help file."
