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A new piece of completely installedequipment costs $12,000 and will have a scrap

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A new piece of completely installedequipment costs $12,000 and will have a scrap value of $2000 at the end of itsuseful life. If the useful-life period is 10 years and the interest is compounded at6 percent per year, what is the capitalized cost of the equipment?
Solution. The cost for replacement of the equipment at the end of its useful life
(assuming costs unchanged) = $12,000 – $2000 = $10,000.
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