Find what is the equivalent annual cost

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Question 1: A commercial parking firm is considering construction of a parking lot as an interim use of a 4-acre tract in Metro City's CBD. The firm uses a 15% minimum attractive rate of return. The tract can be leased for 10 years at $8,000 per year. Construction costs are estimated to be $40,000; 20% of the cost comes from cash on hand, while remaining 80% will be financed by a 10%, fiveyear loan. At termination of the interim use as a parking lot, all improvements must be removed; estimated cost of $6,000. Operating costs are expected to be $30,000 per year. What is the equivalent annual cost?

Reference no: EM132594122

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