CE Board Exam Randomizer

Capitalized cost represents the present worth of a perpetual or very long-life service.

$$Capitalized\ Cost=FC+\frac{FC-SV}{(1+i)^n-1}+\frac{OC}{i}$$

$$P_{perpetuity}=\frac{A}{i}$$

First cost is P324,000 with salvage P50,000 at end of 4-year life. Find capitalized cost if money is worth 6% compounded annually.

$$CC=324,000+\frac{324,000-50,000}{(1.06)^4-1}=1,367,901.15$$

Final answer: P1,367,901.15.

Find the annual payment needed to retire P70,000,000 in bonds over 50 years at 6%. Treat 50 years as nearly infinite.

$$A=Pi=70,000,000(0.06)=4,200,000$$

Final answer: P4,200,000 per year.

Viewing fees bring $800K in the first year and increase by $50K per year. At 10% and perpetual life, find equivalent annual worth.

$$EAW=800+\frac{50}{0.10}=1,300\text{ K}$$

Final answer: $1,300K per year.

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