Please I need help in engineering economy course An Engineer has a fluctuating f
ID: 1212619 • Letter: P
Question
Please I need help in engineering economy course An Engineer has a fluctuating future budget for maintenance of a particular machine. During each of the first 5 years. $1000 per year will be budgeted. During the second 5 years, the annual budget will be $1500 per year. In addition, $3500 will be budgeted for an overhaul of the machine at the end of the fourth year, and another $4500 for an overhaul at the end of the eight year. The engineer asks you to compute the uniform annual expenditure that would be equivalent to these fluctuating amounts, assuming interest at 6% per year?Explanation / Answer
The PW of overhaul prices = 3500/(1.06)^4 + 4500/(1.06)^8 = 2772.327 + 2823.356 = 5595.683
Equivalent annual expenditure of overhaul = 5593.683(A/P.6,10) = 760.27
The PW of budgeted maintenance = 1000*(P/A,6,5) + 1500(P/A,6,5)(P/F,6,5) = 4212.36 + 4721.85 = 8934.21
Equivalent annual expenditure of overhaul = 8934.21(A/P.6,10) = 1213.87
Total uniform annual expenditure = $1974.14