The maintenance cost on an automobile will be $510 the first year. Each subsequent year, the maintenance cost will increase by $200. What is the equivalent equal uniform annual cost of maintaining the car for a 9 year life span at an interest rate of 9% per year?

The maintenance cost on an automobile will be $510 the first year. Each subsequent year, the maintenance cost will increase by $200. What is the equivalent equal uniform annual cost of maintaining the car for a 9 year life span at an interest rate of 9% per year?

 

 

Answer:

Here, A1 = 510

G = 200

i = 9%

n = 9 years

So, Equal uniform annual cost (A) = A1 + G(A/G, i, n)

= 510 + 200(A/G, 9%, 9)

= 510 + 200(3.431)

= 510 + 686.2

= $1196.2

Asked on February 15, 2018 in economics.
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