Answered: Suppose that the maintenance for a…

Suppose that the maintenance for a piece of equipment costs $300 EOY1 and increases by 15% every year for 5 years. The value of money is 9%. What is the equivalent present cost over the time horizon?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Topic: Geometric Gradient Series

3 Suppose that the maintenance for a piece of equipment costs
$300 EOY1 and increases by 15% every year for 5 years. The
value of money is 9%. What is the equivalent present cost over
the time horizon?
AP = $2022.71
(1+g
1+i
ENEODE
В Р
BP = $1175.16
P, = A
g#i
%3D
i-g
CP = $1536.22
n
P = A
g = i
DP = $1166.90

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