Question

Matuk construction has purchased some earthmoving equipment that comes with a 2-year warranty. Repair cost are expected to be $1500 per year, beginning in year 3 and continuing through the equipment 10 year life. what is the Pw of the repair expenses if the interests rate is 9%? excel pls,

Answer 1

year	Repair Cost	Factor	PV
1	0		0.00
2	0		0.00
3	1500	0.772183	1,158.28
4	1500	0.708425	1,062.64
5	1500	0.649931	974.90
6	1500	0.596267	894.40
7	1500	0.547034	820.55
8	1500	0.501866	752.80
9	1500	0.460428	690.64
10	1500	0.422411	633.62
			6,987.82

PW=6988

Formula is a follows:

year	Repair Cost	Factor	PV
1	0		0
2	0		0
3	1500	=1/(1+0.09)^A4	=B4*C4
4	1500	=1/(1+0.09)^A5	=B5*C5
5	1500	=1/(1+0.09)^A6	=B6*C6
6	1500	=1/(1+0.09)^A7	=B7*C7
7	1500	=1/(1+0.09)^A8	=B8*C8
8	1500	=1/(1+0.09)^A9	=B9*C9
9	1500	=1/(1+0.09)^A10	=B10*C10
10	1500	=1/(1+0.09)^A11	=B11*C11
			=SUM(D2:D11)