calculate equivalent uniform annual cost for the

Question

Calculate Equivalent Uniform Annual Cost for the Excavator

An earthwork contractor is considering the purchase of a new excavator.  Based on 10% interest, the equivalent uniform annual cost for the excavator is most nearly:  

Solution:  

EUAC   = 80,000 (A/P, 10%, 20) - 20,000 (A/F, 10%, 20) + annual operating cost

              80,000 (0.1175) - 20,000 (0.175) + 18,000      

          = 9400 - 350 + 18,000       

          = $27,050