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Quiz 4

Rolled ball screws are suitable for high-precision applications like water jet cutting. Their total cost is expected to decrease over time due to increased productivity, as shown in the table listing costs over 8 years from £200,000 to £165,000. The equivalent annual cost of this equipment with an 8% interest rate is £184,507.38.

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912 views1 page

Quiz 4

Rolled ball screws are suitable for high-precision applications like water jet cutting. Their total cost is expected to decrease over time due to increased productivity, as shown in the table listing costs over 8 years from £200,000 to £165,000. The equivalent annual cost of this equipment with an 8% interest rate is £184,507.38.

Uploaded by

Jhay-r Pana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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3. Rolled ball screws are suitable for high-precision applications such as water jet cutting.

Their total
manufacturing cost is expected to decrease because of increased productivity, as shown on the table.
Determine the equivalent annual cost of an interest rate of 8% per year.

Year 1 2 3 4 5 6 7 8
Cost, 200 195 190 185 180 175 170 165
£1000

Given:

A = £200000 i = 8%

G = £5000 n = 8 years.

Required: 𝐴 𝑇

0 1 2 3 7 8

Years

£165000

£1700000

£190000

£195000

£200000
1 𝑛
𝐴𝐺 = G( + )
𝑖 (1+𝑖)𝑛 −1

= 5000(1/8% + 8/(1+8%)^8 -1

𝐴𝐺 = 1549.6197

𝐴 𝑇 = A - 𝐴𝐺

= 200000 – 1549.6197

𝐴 𝑇 = £184507.3803

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