Question

The estimated cost of repairs for your industrial furnace are expected to be $2000 in the first year, and costs are expected to increase by 3% each year thereafter. The seller suggests subscribing to their comprehensive warranty plan which would cover all needed repairs. The warranty plan would require an annual payment that would not increase during the lifetime of the furnace. The furnace is expected to last for 25 years. The interest rate is expected to average 7% over this 25-year time period. What is the most you should pay annually year for this warranty (within $25)?

          The estimated cost of repairs for your industrial furnace are expected to be $2000 in the first year, and costs are expected to increase by 3% each year thereafter. The seller suggests subscribing to their comprehensive warranty plan which would cover all needed repairs. The warranty plan would require an annual payment that would not increase during the lifetime of the furnace. The furnace is expected to last for 25 years. The interest rate is expected to average 7% over this 25-year time period. What is the most you should pay annually year for this warranty (within $25)?

Added by Beatriz M.

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