Question

-nt 3 Factors 0 Help Save & Exit Maintenance costs for a regenerative thermal oxidizer increased according to an arithmetic gradient for 5 years. The cost in year I was $7.000. If the interest rate is 10% per year and the present worth of the costs for a 5-year period was $28,800, the amount of the yearly increase was closest to Multiple Choice o О $1,670. o 5945. o О 5620. o О ѕ330. По f e 15 | Next »

Answer 1

Correct Answer:

D

Working note:

R = 10%

n = 5 years

Arithmetic gradient = G

Then,

PW of the cost = PW of uniform annuity + PW of the arithmetic gradient

28800 = 7000*(P/A, 10%, 5) + G*(P/G, 10%, 5)

28800 = 7000*3.7908 + G*6.862

G = (28800 - 7000*3.7908)/6.862

G = $330

So, the correct alternative is D.