Professor Shelley is creating a budget for her recently awar

Professor Shelley is creating a budget for her recently awarded research grant. Her research requires a heavy-duty generator that has an initial cost of $30681. She estimates she will need to pay for maintenance on the generator beginning at the end of year 5. She will pay maintenance costs each year for the next 5 years. At that point, she will either scrap her research or submit a new research proposal. She estimates the first year of maintenance will cost $401, with the maintenance costs increasing by $76 per year for each year after that. How much should she put in her budget for maintenance costs? She is using a 5% interest rate.

Solution

Intial Cost of generator = $30681.

Maintenance cost for the fifth year= $401.

The intersest for the remining 5 years= (401*5*5)/100 =$100.25.

Maintenance cost for the sixth year= $401+$76=$477.

The intersest for the remining 4 years=(477*4*5)/100= $95.4

Maintenance cost for the fifth year= $477+$76=$553.

The intersest for the remining 3 years=(553*3*5)/100= $82.95

Maintenance cost for the fifth year= $553+$76=$629.

The intersest for the remining 2 years=(629*2*5)/100=$62.9

Maintenance cost for the fifth year= $629+$76=$705.

The intersest for the remining 1 year=(705*1*5)/100=$35.25

The interest for the initial cost= (30681*10*5)/100=$15340.5.

The total biudget of the Professor Shelley project = 30681+401+477+553+629+705+15340.5+100.25+95.4+82.95+62.9+35.25=$49163.25