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2.40 A company that manufactures purgeable hydrogen sulfide monitors will make deposts such that each one is 7% larger than the preceding one. How large must the first deposit at the end of year 1 be if the deposits extend through year 10 and the fourth deposit is $5550? Use an interest rate of 10% per year
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Question & Answer: 2.40 A company that manufactures purgeable hydrogen sulfide monitors will make deposts such that each one is 7% l…..
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Fourth deposit = 5550 and each deposit increases by 7%
Therefore deposit at the end of year 1 must have increase by 7% for 3 years continuously to arrive at 5550 at 4th year end
Deposit in first year = 5550 / ( 1 + 7%)^3
= 4530.45
