Your client is asking you to design a Flux Capacitor. The Flux Capacitor is expected to cost $5,200 to build. If operations and maintenance costs are anticipated to be 15% of the build costs the first year of operation and operation and maintenance costs will increase by 6% each year after, how much will your client have invested in the Flux Capacitor after 5 years?
Question:
Your client is asking you to design a Flux Capacitor. The Flux Capacitor is expected to cost $5,200 to build. If operations and maintenance costs are anticipated to be 15% of the build costs the first year of operation and operation and maintenance costs will increase by 6% each year after, how much will your client have invested in the Flux Capacitor after 5 years?
Notes from instructor:
I have had a few questions about the Econ. Assignment. I want to clarify that the 6% interest rate does not accumulate over 4 years and it is not added to the 15%. If something increases by the interest it is (1+i) each year. I recommend finding the cost of each year and then summing them up. The equation is not direct from the FE manual so this is going to best your best course of action for now.
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