I need help with this problem I'm getting the final answer as 13,565.24 but it is incorrect. The correct answer is 16,247 using the annuity formula. please solve and show all of your work A company that manufactures air-operated drain valve assemblies currently has$85,000 available to pay for plastic components over a 5-year period. If the companyspent only $42,000 in year 1, what uniform annual amount can the company spendin each of the next 4 years to deplete the entire budget? Let i = 10% per year.Round your answer to the nearest dollar. Do not include the units.

Answered: A company that manufactures…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I need help with this problem I'm getting the final answer as 13,565.24 but it is incorrect. The correct answer is 16,247 using the annuity formula. please solve and show all of your work

A company that manufactures air-operated drain valve assemblies currently has
$85,000 available to pay for plastic components over a 5-year period. If the company
spent only $42,000 in year 1, what uniform annual amount can the company spend
in each of the next 4 years to deplete the entire budget? Let i = 10% per year.
Round your answer to the nearest dollar. Do not include the units.

Expert Solution

Step 1: Determine the given information:

Present value =$85000

Number of periods =5

Expenditure on the first year is $42000

Let the company spend x amount per year from year 2 to 5.

i =10%

We need to find the value of x.

The total present value of expenditure from year 1 to year 5 should be equal to $85000. We use the present worth formula of equal payment series and single payment series.

For equal payment series, $open parentheses P divided by A comma i comma n close parentheses equals fraction numerator open parentheses 1 plus i close parentheses to the power of n minus 1 over denominator i open parentheses 1 plus i close parentheses to the power of n end fraction$

For single payment series, $left parenthesis P divided by F comma i comma n right parenthesis equals 1 over open parentheses 1 plus i close parentheses to the power of n$

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