Question

Part of the income that a machine generates is put in sinking fund to replace the machine when it wears out. If a $15000 deposited annually at 6% interest. How many years must the machine be kept before new machine costing $50,000 can be purchased? a) what if you postpone 2 years as a grace period b) what if you increase the interest rate to 8% (not performing grace period)

Answer 1

n be is 6% z Cost Annual feitis? 1 2006 (1.065/ Let number of years Pw Annual icinin 60,000 - 15,0001 106-1 10.06(106) 0.2 - 1.06n 1.25 log (1.25)/log(106) a) If grace period a 2 year Pu Annual [citim iction Cltij? 50,000 15,000 11.069.) 10g (1.29) 14:37 1.29 ) na year 10g (106) 1.06 13.83 years cost i X y X 1.062 1.06

в 21 а2-3 О: + 3 1 4 2 - + 2 (b) 44i: 8/. P W cast Annual [eitis? - icitija (-08 БО, ООО (5 ООО o-og (1-og" -) 1. og" - 1Б ol — 2) - log (15) 109 1-08) * • 03 yeare u the answer