question archive Matuk construction has purchased some earthmoving equipment that comes with a 2-year warranty
Matuk construction has purchased some earthmoving equipment that comes with a 2-year warranty
Subject:EconomicsPrice:3.87 Bought7
Matuk construction has purchased some earthmoving equipment that comes with a 2-year warranty. Repair cost are expected to be $1500 per year, beginning in year 3 and continuing through the equipment 10 year life. what is the Pw of the repair expenses if the interests rate is 9%? excel pls,
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Answer:
| year | Repair Cost | Factor | PV |
| 1 | 0 | 0.00 | |
| 2 | 0 | 0.00 | |
| 3 | 1500 | 0.772183 | 1,158.28 |
| 4 | 1500 | 0.708425 | 1,062.64 |
| 5 | 1500 | 0.649931 | 974.90 |
| 6 | 1500 | 0.596267 | 894.40 |
| 7 | 1500 | 0.547034 | 820.55 |
| 8 | 1500 | 0.501866 | 752.80 |
| 9 | 1500 | 0.460428 | 690.64 |
| 10 | 1500 | 0.422411 | 633.62 |
| 6,987.82 |
PW=6988
Formula is a follows:
| year | Repair Cost | Factor | PV |
| 1 | 0 | 0 | |
| 2 | 0 | 0 | |
| 3 | 1500 | =1/(1+0.09)^A4 | =B4*C4 |
| 4 | 1500 | =1/(1+0.09)^A5 | =B5*C5 |
| 5 | 1500 | =1/(1+0.09)^A6 | =B6*C6 |
| 6 | 1500 | =1/(1+0.09)^A7 | =B7*C7 |
| 7 | 1500 | =1/(1+0.09)^A8 | =B8*C8 |
| 8 | 1500 | =1/(1+0.09)^A9 | =B9*C9 |
| 9 | 1500 | =1/(1+0.09)^A10 | =B10*C10 |
| 10 | 1500 | =1/(1+0.09)^A11 | =B11*C11 |
| =SUM(D2:D11) | |||
