Answer to Question #240597 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question #240597
Gerard has purchased a new car. He wishes to set aside enough money in a bank account to pay the
maintenance for the first 5 years. It has been estimated that the maintenance cost of a car is as follows:
Year Maintenance Cost
1 $100
2 120
3 140
4 160
5 180
Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest.
How much should Gerard deposit in the bank now?
1
Expert's answer
2021-09-28T00:54:46-0400

This is the calculation of the present value (PV) by the discount rate of 5%.



Answer: The deposited amount should be $766.64.


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