Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (year 1) the cost for check valve components is $9,000. Based on closure of a new contract with a distributor in China and volume discounts, the company expects this cost to decrease. If the cost in year 2 and each year thereafter decreases by $560, what is the equivalent annual cost for a 5-year period at an interest rate of 10% per year?

Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
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Solar Hydro manufactures a revolutionary aeration
system that combines coarse and fine bubble aeration
components. This year (year 1) the cost for
check valve components is $9,000. Based on closure
of a new contract with a distributor in China
and volume discounts, the company expects this
cost to decrease. If the cost in year 2 and each year
thereafter decreases by $560, what is the equivalent
annual cost for a 5-year period at an interest
rate of 10% per year?

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