Tacozza Electric, which manufactures brush dc servo motors, budgeted $95,000 per year to pay for specific components over the next 5 years. If the company expects to spend $55,000 in year 1, how much of a uniform (arithmetic) increase each year is the company expecting in the cost of this part? Assume the company uses an interest rate of 10% per year.
What will be an ideal response?
95,000 = 55,000 + G(A/G,10%,5)
95,000 = 55,000 + G(1.8101)
G = $22,098
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