The maintenance on a machine is expected to be $ 155 at the end of the first yea
ID: 1200486 • Letter: T
Question
The maintenance on a machine is expected to be $ 155 at the end of the first year, then increasing by $35 each year for the next 7 years. What sum of money would need to be set aside now to pay the maintenance for the 8-year period? Assume 6% interest. What is the uniform annual equivalent maintenance cost for the above machine? Compute an equivalent A for the maintenance costs. An individual is considering the purchase of a used automobile. The total price is $6200 with $ 1240 as a down payment and the balance to be paid in 48 equal monthly payments with interest of 12% compounded monthly. The payments are due at the end of each month. Compute the monthly payment. The maintenance on a machine is expected to be $155 at the end of the first year, then increasing by $35 each year for the next 7 years. What sum of money would need to be set aside now to pay the maintenance for the 8-year period? Assume 6% interest.Explanation / Answer
1 (a) P = 155(P/A, 6%, 8) + 35(P/G, 6%, 8) = 155(6.210) + 35(19.841) = $1656.99
(b) Equivalent uniform annual maintenance cost: A = 155 + 35(A/G, 6%, 8) = 155 + 35(3.195) = $266.83
2. The amount to be repaid by the 48 monthly payments is the cost of the automobile minus the $1240 down payment.
P = $4960 A = unknown n = 48 monthly payments i = 1% per month
A = P(A/P, i, n) = 4960(A/P, 1 %, 48) = 4960(0.0263) = $130.45
3. same as part 1
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