A machine that costs 1000 has a working life of three years, after which it is valueless

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A machine that costs £1000 has a working life of three years, after which it is valueless and has to be replaced. It saves the owner £500 per year while it is in use. Show that the true total saving £S to the owner over the three years is

S = 500 - 1 1+r/100 1000 + 1 (1+r/100) + 1 (1+r/100)

where r% is the current rate of interest. Estimate S for r = 5, 10, 15 and 20. When does the machine truly save the owner money?

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Modern Engineering Mathematics

ISBN: 9781292253497

6th Edition

Authors: Glyn James

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Question Posted: Jan 13, 2024 09:03 AM

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A machine that costs 1000 has a working life of three years, after which it is valueless

Question:

S = 500 - 1 1+r/100 1000 + 1 (1+r/100) + 1 (1+r/100)

Step by Step Answer:

500 at the end of one year was worth 500 1100 at the beginning of the year where 7 is ...View the full answer

Modern Engineering Mathematics

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