A firm requires a crane which costs $80,000 and has an estimated salvage value of $10,000 at

Question:

A firm requires a crane which costs $80,000 and has an estimated of $10,000 at the end of a 6-year operating life. If the firm uses the rate of interest as 20% for the project evaluation, how much must be earned on capital recovery basis so that the firm recovers its invested capital plus earns a return on the capital committed to the equipment during its lifetime?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...