Discussion
An asset with a first cost of 50 000 and no salvage has capital recovery at 10 per cent over 2 years of about
Answer: B
Correct answer: 28 810
\[ A = 50{,}000 \times (A/P, 10\%, 2) = 50{,}000 \times 0.5762 = 28{,}810. \] Spreading the cost over only two years leaves each year carrying more than half the purchase price, which is why capital recovery dominates the total annual cost of a young asset.
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