Question #240598

The first-year maintenance cost for a new car is estimated to be $150, and it increases at a uniform rate

of 15%per year. Using an 8%interest rate, calculate the present worth (PW) of the cost of the first 5

years of maintenance.

of 15%per year. Using an 8%interest rate, calculate the present worth (PW) of the cost of the first 5

years of maintenance.

Expert's answer

"C_c=F_c+P_{o,m}"

"F_c= initial \\space debt"

and

"p_{o,m}=A\/i"

"i=interest =8\\%"

"P_o,m=2777777.778"

"C_c=(25000\\times5)+2777777.778"

"C_c=2902777.78\\space answer"

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