Arithmetic Gradient: Equivalent Annuity.

On a certain piece of machinery, it is estimated that the maintenance expense will be as follows:

What is the equivalent uniform annual maintenance cost for the machinery if 6% interest is used?

SOLUTION

two components:

A = 100 + 100(A / G, 6%, 4)= 100+ 100(1.427) = $242.70

The equivalent unifonn annual maintenance cost is $242.70.