Calculate the net annual profit - construction management, Civil Engineering

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A heavy equipment rental company uses a high interest rate of 30% for the rental of a specialty heavy haul dump truck. 

The net annual profit for this investment is most nearly:

Total annual income      :  $55,000

Capital cost                  :  $80,000

Annual operating cost   :  $28,600

Lifespan                      :  6 years

Solution:

Calculate the annual capital recovery with return: 

$80,000 (A/P, 30%, 6yrs) = $30,272

Calculate the net annual profit:

55,000 - (30,272 + 28,600) =   - $3,872 (net loss)


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