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6313-2-16P AID: 34788| 26/10/2017

P(n+1)+S(n-1) Comment [VNK1]: All the variables are to be


Average Annual investment method = explained.
2n
Comment [VNK2]: Description could be
provided before formula.

Initial cost of Asphalt loader: $326000


Cost of tires : - 26000
Purchase price less tires (P) : $300000 Comment [VNK3]: These calculations could be
developed as a new step.

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

$300000(6+1)+$75000(6-1)
AAI =
26
$2100000+$375000
=
12
= $206250/yr
$206250/yr6.32% Comment [VNK4]: These dot lines are to be
Cost of money portion = avoided.
2800 hr/yr
Comment [VNK5]: Numbering for equation
= $4.66 /hr (1) should be at page right.
Comment [VNK6]: Description should be given
regarding the formula.

Straight line depreciation portion Comment [VNK7]: Only equations are to be in


math type.
Initialcost $326000
Cost of tires -26000
Salvage -75000
$225000

$225000
= $13.40/hr (2)
6 yr2800 hr/yr

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 [VNK9]: Equations are to be in math
type only.
Comment [VNK10]: Some explanation could be
provided before the calculation step.

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