Discussion
For that same asset over 5 years the capital recovery is about
Answer: C
Correct answer: 13 190
\[ A = 50{,}000 \times (A/P, 10\%, 5) = 50{,}000 \times 0.2638 = 13{,}190. \] Extending the life from two years to five cuts the capital recovery by more than half. That steep fall is what makes keeping an asset attractive, and it is only checked when maintenance costs rise fast enough to overtake it.
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