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In: Economics

Your company just purchased a piece of equipment. The maintenance cost of the equipment is estimated...

Your company just purchased a piece of equipment. The maintenance cost of the equipment is estimated at $1,200 for the first year and it is to rise by $200 each year. How much should be set aside now to have enough to cover for the maintenance cost for the next 7 years? Assume payments are made at the end of each year and an interest rate of 4%.

Solutions

Expert Solution

Maintenance costs= 1200

Time = 7

Rate of interest= 4%

So amount set aside= 1200(p/A, 4%, 7)

= 1200*3.630

=$ 4356

If you are not satisfied with a answer plz inform me I will do it again

Rahul Sunny answered 2 years ago
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