Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 7

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, $26,000, $28,000, $30,000, and $32,000 for years 1 to 5. respectively. The general inflation rate
is estimated to be 5% per year, and the company will receive 13% 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.