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6313-2-16P

AID: 34788| 26/10/2017

Average Annual investment method =

P(n+1)+S(n-1)

2n

Comment [VNK1]: All the variables are to be explained.

 Comment [VNK2]: Description could be provided before formula. developed as a new step. Comment [VNK4]: These dot lines are to be avoided. Comment [VNK6]: Description should be given regarding the formula.
 Initial cost of Asphalt loader: \$326000 Cost of tires : - 26000 Purchase price less tires (P) : \$300000

Substitute \$75000 for salvage value(S) after six years service (n).

AAI=

\$300000(6+1)+\$75000(6-1)

2×6

\$2100000+\$375000

Comment [VNK3]: These calculations could be

 = 12 =\$206250/yr Cost of moneyportion = \$206250/yr×6.32% 2800hr/yr =\$4.66/hr (1)
 Straight linedepreciation portion Initialcost \$326000 Cost of tires -26000 Salvage -75000 \$225000 \$225000 =\$13.40/hr (2) 6 yr×2800hr/yr

Comment [VNK5]: Numbering for equation should be at page right.

Comment [VNK7]: Only equations are to be in math type.

Total ownership depreciation using the AAI method:

 \$4.66/hr +\$ 13.40/hr = \$ 18.06 /hr

Comment [VNK8]: There should be no space

left.

Comment [VNK10]: Some explanation could be provided before the calculation step.

Comment [VNK9]: Equations are to be in math type only.