Q7- Early detection of cracks may reduce repair costs by an estimated amount of

Question

Q7- Early detection of cracks may reduce repair costs by an estimated amount of $200,000 per year. If the savings start now and continue through year 5, determine the equivalent future worth in year 5 of these savings at an interest rate of 10% per year. ed plans to deposit money starting now for his son's education and continue through Q8- Ahme year 10. If he deposits $5000 each year starting now, how much will his son be able to withdraw starting in year l l and continue through year 15 + Interest is 8% per year. ords English (US)

Explanation / Answer

(Q-7)

Future worth ($) = 200,000 x F/A(10%, 5) x (1.1)** = 220,000 x 6.1051# = 1,343,122

**Since saving starts now (year 0), this is an annuity due and a multiplicative factor of (1 + Interest rate) is added

#From F/A Factor table

NOTE: As per Chegg Answering Policy, first question is answered.

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