Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (year 1) the cost for check valve components is $9,000. Based on closure of a new contract with a distributor in China and volume discounts, the company expects this cost to decrease. If the cost in year 2 and each year thereafter decreases by $560, what is the equivalent annual cost for a 5-year period at an interest rate of 10% per year?
What will be an ideal response?
A = 9000 – 560(A/G,10%,5)
= 9000 – 560(1.8101)
= $7986
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