A man buys a motor cycle. There will be no maintenance cost the first year as the motor cycle is sold with one-year free maintenance. The 2nd year the maintenance is estimated at P2000. In subsequent years the maintenance cost will increase by P2000 per year. How much would need to be set aside now at 5% interest to pay the maintenance costs of the motor cycle for the first 6 years of ownership? What is the final annuity using deferred annuity? (2 decimal places only, rounded off) What is the final gradient sum amount? (2 decimal places only, rounded off) What is the present maintenance cost? (use your answer above to solve the present maintenance cost) (2 decimal places only, rounded off)

A man buys a motor cycle. There will be no maintenance cost the first year as the motor cycle is sold with one-year free maintenance. The 2nd year the maintenance is estimated at P2000. In subsequent years the maintenance cost will increase by P2000 per year. How much would need to be set aside now at 5% interest to pay the maintenance costs of the motor cycle for the first 6 years of ownership? What is the final annuity using deferred annuity? (2 decimal places only, rounded off) What is the final gradient sum amount? (2 decimal places only, rounded off) What is the present maintenance cost? (use your answer above to solve the present maintenance cost) (2 decimal places only, rounded off)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A man buys a motor cycle. There will be no maintenance cost the first year as the motor cycle is sold with one-year free maintenance. The 2nd year the
maintenance is estimated at P2000. In subsequent years the maintenance cost will increase by P2000 per year. How much would need to be set aside now at
5% interest to pay the maintenance costs of the motor cycle for the first 6 years of ownership?
What is the final annuity using deferred annuity?
(2 decimal places only, rounded off)
What is the final gradient sum amount?
(2 decimal places only, rounded off)
What is the present maintenance cost?
(use your answer above to solve the present maintenance cost) (2 decimal places only, rounded off)

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