A company is considering buying a CNC machine. In today's dollars, it is estimated that the maintenance costs for the machine (paid at the end of each year) will be $25,000, $27,000, $28,000, $31,000, and $33,000 for years 1 to 5, respectively. The general inflation rate (F) is estimated to be 3% per year, and the company will receive 17% return (interest) per year on its invested funds during the inflationary period. The company wants to pay for maintenance expenses in equivalent equal payments (in actual dollars) at the end of each of the five years. Find the amount of the company's payments. The amount of the company's payments is $ thousand. (Round to the nearest thousand.)

A company is considering buying a CNC machine. In today's dollars, it is estimated that the maintenance costs for the machine (paid at the end of each year) will be $25,000, $27,000, $28,000, $31,000, and $33,000 for years 1 to 5, respectively. The general inflation rate (F) is estimated to be 3% per year, and the company will receive 17% return (interest) per year on its invested funds during the inflationary period. The company wants to pay for maintenance expenses in equivalent equal payments (in actual dollars) at the end of each of the five years. Find the amount of the company's payments. The amount of the company's payments is $ thousand. (Round to the nearest thousand.)

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.6IP

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