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Suppose that a machine that costs $ 7,000.00 will be replaced at the end of 8 years, during which time it will have a waste
Suppose that a machine that costs $ 7,000.00 will be replaced at the end of 8 years, during which time it will have a waste value of $ 700.00. In order to have money at that time to buy a new machine with the same cost, a depreciation fund is established. The amount in the fund at that time will be the difference between the replacement cost and the scrap value. If equal payments are placed at the end of each quarter and the fund earns an 8% compounded quarterly, how much should each payment be?
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