money should the company set aside now to cover all the repair costs
A construction company recently purchased a crane with a 6-year warranty that covers maintenance and repairs. The company plans on using the crane for 15 years, and wants to set aside money now to pay for the repairs once the warranty expires. The repair costs are expected to average $13,500 a year at the 7th year and beyond, with a large overhaul cost of $20,000 in the 9th year of operation and another overhaul cost of $35,000 in the 12th year of operation. Assuming an interest rate of 4%, answer the following questions:
How much money should the company set aside now to cover all the repair costs for the 15-year lifespan?
( Ans: $115,237.39, can someone explain how it got to this . please I need stepwise solution )
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
