#7: A company expects the cost of equipment maintenance to be $5,000 in year one, ss,500 in year two, and amounts increasing by $500 per year through year 10. At an interest rate of 10% per year,...

Question

Question

Answer 1

Answer #1

This can be calculated by a simple present worth formula.

The formula says if you have a value of Pi at Year i, the present(Year 0) net worth is Pi/(1+r)^i.

So, the answer shoud be 5000/1.1+5500/1.1^2+6000/1.1^3+......+9500/1.1^10 = 42168.50

Thus, the correct option will be b.

Answer 2

Similar Homework Help Questions

A manufacturing company expects sales of $50,000 in quarter one, increasing by $3,000 per quarter through...

A manufacturing company expects sales of $50,000 in quarter one, increasing by $3,000 per quarter through year 3. Calculate the present worth of the sales through a 3-year period at an interest rate of 10% per year compounded monthly
Find the present worth of $1,000 in year 5 and amounts increasing by 7% per year...

Find the present worth of $1,000 in year 5 and amounts increasing by 7% per year through year 9. Use an interest rate of 12% per year. i = 12% 4 P = ??? A = $1000 PT = $ - 2594.88 7% Increase/yr 13
uestion 8 10 points The maintenance costs of a piece of equipment are expected to be...

uestion 8 10 points The maintenance costs of a piece of equipment are expected to be S1 500 at the end of the first year and expected to increase by $125 each year through year seven Assuming an interest rate of 10% Match the following questions with the closest correct answers from the given list What is the present worth of base amount? A $1595 D B. 51280 C. 57302 What is the present worth of gradient amount? What is...

Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one...

Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one and increase by 3.5% each year through year five. What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year, compounded bi-weekly (compounded once in two weeks)? The equivalent annual worth is $ .
John Deere expects the cost of a tractor part to increase by $15 per year beginning...

John Deere expects the cost of a tractor part to increase by $15 per year beginning 5 years from now. If the cost in years 1-4 is $80, determine the present worth in year 0 of the cost through year 10 at an interest rate of 10% per year. Show the cash flow diagram, solve it in Excel,show formula
this is for my engineering economics #2.59 thank you through year b at an interest rate...

this is for my engineering economics #2.59 thank you through year b at an interest rate of 10% per year? 2.59 Very Light Jets (VLJs) are one-pilot, two-engine jets that weigh 10,000 pounds or less and have only five or six passenger seats. Since they cost half as much as the most inexpensive business jets, they are considered to be the wave of the future. MidAm Charter purchased five planes so that it can initiate service to small cities that...

of 10% per year. 2.101 A build to operate (BTO) company signed a year, what year...

of 10% per year. 2.101 A build to operate (BTO) company signed a year, what year 4? contract to operate several industrial wastewater treatments plants for 10 years. The contract will pay the company $2.5 million now and amounts increasing by $200,000 each year through year 10. At an interest rate of 10% per year, what is the present worth of the contract now? Solve using (a) tabulated factors, and (b) a spreadsheet.
1. The maintenance cost for equipment has been $10,000 per year for the past six years....

1. The maintenance cost for equipment has been $10,000 per year for the past six years. The interest rate was 6% per year compounding monthly for the first two years, 7% for the third year, and 8% per year compounding quarterly for the last three years. What is the equivalent maintenance cost at now?
QUESTION 15 Initial maintenance costs for a particular piece of construction equipment are $3,000 per year....

QUESTION 15 Initial maintenance costs for a particular piece of construction equipment are $3,000 per year. These costs are expected to increase by $1,000 per year during the equipment's 5-year lifespan. Using an interest rate of 8 percent compounded annually, determine the present worth equivalent for the maintenance costs. CA. $4,650 B.$7.372 C. $11.978 D.$19.351

Question 5 $15000 is deposited each year in years 3 through 10 at an interest rate...

Question 5 $15000 is deposited each year in years 3 through 10 at an interest rate of 10 % per year. What is the present worth of deposited money 7