The maintenance on a 4 year old machine is expected to be $155 at the end of the

Question

The maintenance on a 4 year old machine is expected to be $155 at the end of the first year, and increasing by $35 each year for the following seven years. What amount of money would need to be set aside now to pay the maintenance for the eight year period? Assume 6 percent interest per year. The maintenance on a 4 year old machine is expected to be $155 at the end of the first year, and increasing by $35 each year for the following seven years. What amount of money would need to be set aside now to pay the maintenance for the eight year period? Assume 6 percent interest per year.

Explanation / Answer

amount of money = 155/1.06 + (155+35)/1.06^2 + (155+2*35)/1.06^3 + (155+3*35)/1.06^4 + (155+4*35)/1.06^5 + (155+5*35)/1.06^6 + (155+6*35)/1.06^7 + (155+7*35)/1.06^8 =$1656.97

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