Question
In 2011, an engineer estimated the cost for laser-based equipment to be $400,000. The engineer used the M&S equipment index values of 1178.5 for 2004
In 2011, an engineer estimated the cost for laser-based equipment to be $400,000. The engineer used the M&S equipment index values of 1178.5 for 2004 and 1490.2 for 2011 with the cost-capacity equation and an exponent value of 0.61. The original equipment had only one-fourth the capacity of the new equipment. What was the cost of the original equipment in 2004? Find the annual percentage rate of increase in the index over the 7 years from 2004 to 2011. If the index continues to increase at the same annual percentage rate over the over the 5 years from 2011 to 2016, determine the value of the index in 2016. Estimate the cost of equipment in 2016, assuming that the equipment will have 4 times the capacity of the equipment in 2011.
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