A material supplier won a 7-year contract to supply a construction company with all their building materials needs. The contract is expected to generate a first-year profit of $12,000. This annual profit is expected to increase by $7,000 each successive year for the rest of the contract period. The profits will be invested in an account earning an interest rate of 12% per year. (a) Assuming that the profits are deposited in the account at the end of each year, how much money will be in the account immediately after the last deposit is made? (b) What is the equivalent uniform annual deposit? (a) The amount in the account immediately after the last deposit is $121068 (to the nearest dollar). (b) The equivalent uniform annual deposit is $12000 (to the nearest dollar)

A material supplier won a 7-year contract to supply a construction company with all their building materials needs. The contract is expected to generate a first-year profit of $12,000. This annual profit is expected to increase by $7,000 each successive year for the rest of the contract period. The profits will be invested in an account earning an interest rate of 12% per year. (a) Assuming that the profits are deposited in the account at the end of each year, how much money will be in the account immediately after the last deposit is made? (b) What is the equivalent uniform annual deposit? (a) The amount in the account immediately after the last deposit is $121068 (to the nearest dollar). (b) The equivalent uniform annual deposit is $12000 (to the nearest dollar)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A material supplier won a 7-year contract to supply a construction company with all their building materials needs. The
contract is expected to generate a first-year profit of $12,000. This annual profit is expected to increase by $7,000 each
successive year for the rest of the contract period. The profits will be invested in an account earning an interest rate of
12% per year.
(a) Assuming that the profits are deposited in the account at the end of each year, how much money will be in the
account immediately after the last deposit is made?
(b) What is the equivalent uniform annual deposit?
(a) The amount in the account immediately after the last deposit is $121068 (to the nearest dollar).
(b) The equivalent uniform annual deposit is $12000 (to the nearest dollar)

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