CAIIB RETAIL::

A.B. purchased a license to engage in the transportation services for which he paid 6000.

Moreover, he paid 30000 for the purchased car.

He hopes to replace a car with a new one every three years, hoping to allocate 30000 for a new car.

In addition, he can sell the car for 10000.

Determine the costs of this business, if the interest rate is 12%.

We have that the initial business costs are 35000,

the replacement costs are R = 30000 - 10000 = 2 0000,

In addition, i = 0.12; c = 3; p = 0.404928: Then

K = 35000 + (20000/0:404928)

= 84391.5

Thus, the c apitalized general business costs will be 84391.5