Problem
To increase the capability of a project, a new facility is built at $10 million which has a useful life of 30 years.
i. Using the annualization factor at 5% interest, calculate the annual cost of the facility.
ii. Calculate the annual cost of the facility using interest rates of 4% and 7%.
iii. To implement the project, a new equipment is purchased at $1.5 million which has a useful life of 20 years. Using the annualization factor at 5% interest rate, what is the equipment's annual depreciation cost?