Video cards based on Nvidia\'s highly praised GeForce2 GTS processor tipically c
ID: 1177710 • Letter: V
Question
Video cards based on Nvidia's highly praised GeForce2 GTS processor tipically costs - $260.00. Nividia released a light version of the ship that costs $170. If a certain video game maker was purchasing 1,000 chips per month, what was the present worth of savings associated with the cheaper chip over a 2-year period at an interest rate of 24% per year, compounded monthly?
Known...
1.) Evaluate what PW cost would be for company @ $260/chip
2.)Evaluate @ $170/chip over 2yr. period
3.) Compare answers and difference between the two will be the savings.
How do I set this problem up???
Explanation / Answer
annual interest rate,r = (1 + 0.24/12)^2 - 1
= 0.0404 = 4.04%
saving = 260-170 = $90 per chip
1.)
PW for expensive chip:
= 260*1000*(P|F,0.0404,2)
= 260000*0.9238
= $ 240199.81
2.)
PW for cheap chip:
= 170*1000*(P|F,0.0404,2)
= 170*1000**0.9238
= $ 157053.72
3.)
savings = 240199.81-157053.72
= $ 83146.09
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