A piece of equipment has an initial cost of $5000 in year 1. The maintenance cost...

 

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A piece of equipment has an initial cost of $5000 in year 1. The maintenance cost is $300/yr for the total lifetime of seven years. During years 1-3, the rate of inflation is 5%, and the effective annual rate of interest is 9%. The uninflated present worth of the equipment during year 1 is most nearly (A) $3200 (B) $3300 (C) $3400 (D) $3500 A piece of equipment has an initial cost of $5000 in year 1. The maintenance cost is $300/yr for the total lifetime of seven years. During years 1-3, the rate of inflation is 5%, and the effective annual rate of interest is 9%. The uninflated present worth of the equipment during year 1 is most nearly (A) $3200 (B) $3300 (C) $3400 (D) $3500

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