Answer to Question #242743 in Economics of Enterprise for jay

Question

Metalfab Pump and Filter expects the cost of steel bodies for 6-inch valves to increase by $1.5 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year time period at an MARR of 7% per year compounded quarterly?

Answer 1

7% = 0.07

$1+0.07= 1.07$

$= 80/(1.07)^1+81.5/(1.07)^2+83/(1.07)^3+84.5/(1.07)^4+86/(1.07)^5+87.5/(1.07)^6+89/(1+1.07)^7+90.5/(1.07)^8+92/(1.07)^9+93.5/(1.07)^{10}+ 95/(1.07)^{11}+96.5/(1.07)^{12}$

$= 74.77+56.32+ 67.76+64.5+61.43 +58.41+55.63+52.92+53.8+ 51.1+48.72+45.9567.76+64.5+61.43+58.41+55.63+52.92+53.8+51.1+48.72+45.95$

$= 691$