Answer:
$81,301.80
This is the yearly reveneus required to break even the project at 15% return
Explanation:
We need to solve for the equivalent annual cost to break-even financially at 15%
PV of the salvage value
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity $15,000.00
time 14.00
rate 0.15000
[tex]\frac{15000}{(1 + 0.15)^{14} } = PV[/tex]
PV 2,119.9299
list price: 250,000 - quota: 2,119.93 = 247,880.07
Now we solve for the equivallent annuity payment for this:
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV 247,880.07
time 14
rate 0.15
[tex]247880.07 \div \frac{1-(1+0.15)^{-14} }{0.15} = C\\[/tex]
C $ 43,301.795
Now, we add up the maintenance cost:
43,301.80 + 38,000 = 81,301.8
This is the yearly reveneus required to break even the project at 15% return
