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In: Finance

Ok, a company wants to deposit extra money to cover its increased maintenance costs for the...

Ok, a company wants to deposit extra money to cover its increased maintenance costs for the next 14 years. How much are they to deposit now if they expect the costs to increase by $3,433 per year, starting from year 2, and their MARR is 1%? Thanks.

Solutions

Expert Solution

The increase in maintenance costs constitute an ordinary annuity (uniform series payments).

Amount to be deposited now is the present value of this annuity one year from now,, further discounted for 1 year.

Amount to be deposited now= $ 44,199.72 calculated as follows:

jeff jeffy answered 1 year ago
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