An annual maintenance cost of a generator is P1000 after one year and it is estimated to increase by 10% each year for the subsequent 7 years. Find the present worth of the maintenance cost if the rate of interest is 15% compounded annually.

An annual maintenance cost of a generator is P1000 after one year and it is estimated to increase by 10% each year for the subsequent 7 years. Find the present worth of the maintenance cost if the rate of interest is 15% compounded annually.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An annual maintenance cost of a generator is P1000 after one year and it is
estimated to increase by 10% each year for the subsequent 7 years. Find the present
worth of the maintenance cost if the rate of interest is 15% compounded annually.
ANSWER: P5985.1403
Geometric Gradient
Geometric Gradient - a series of payments but has common ratio on the succeeding payments.

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