Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,821.61
an4_bolt$4,086.43
DanielDng$2,350.70
Skywalke...$1,020.00
jtfan2$903.09
Visitor$850.00
Carolll$803.33
trungbin$803.09
Jade$785.80
cuiting$779.70
Visitor$770.00
Visitor$760.00
Visitor$700.00
Visitor$680.00
Visitor$650.00
Visitor$650.00
Visitor$650.00
alison$644.70
ninalee$639.70
Kyrie Ir...$590.00
 

Question 280  equivalent annual cash flow

You own a nice suit which you wear once per week on nights out. You bought it one year ago for $600. In your experience, suits used once per week last for 6 years. So you expect yours to last for another 5 years.

Your younger brother said that retro is back in style so he wants to wants to borrow your suit once a week when he goes out. With the increased use, your suit will only last for another 4 years rather than 5.

What is the present value of the cost of letting your brother use your current suit for the next 4 years?

Assume: that bank interest rates are 10% pa, given as an effective annual rate; you will buy a new suit when your current one wears out and your brother will not use the new one; your brother will only use your current suit so he will only use it for the next four years; and the price of a new suit never changes.




Copyright © 2014 Keith Woodward