Please awnser the question step-by-step. Please do not skip anything (including

Question

Please awnser the question step-by-step. Please do not skip anything (including the math). Thank you!!

Metso Automation, which manufactures address able quarter-turn electric actuators, is planning to set aside $100,000 now and $150,000 one year from now for possible replacement of the heating and cooling systems in three of its larger manufac- turing plants. If the replacement won't be needed for 4 years, how much will the company have in the account, if it earns interest at a rate of 8% per year?

Explanation / Answer

P = $100,000

At the end of 1st year the amount becomes

F = P(F/P, i, n) = 100,000(F/P, 8%, 1) = 100,000 x 1.080 = $108,000

At the end of 1st year, $ 150,000 is added to $108,000. Now

P = $258,000

At the end of 4th year the amount becomes

F = P(F/P, i, n) = 258,000(F/P, 8%, 3) = 258,000 x 1.260 = $325,080

Therefore, the company will have $325,080 in the account

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---