Question 1 · Number Patterns and Finance
An industrial machine costs
Calculate the value of the machine at the end of year 8.
Calculate the maintenance cost during year 8.
Calculate the total cumulative maintenance cost over the first 8 years.
The annual depreciation loss in year
is defined as the value at the start of the year minus the value at the end of the year. Show that the depreciation loss in year is given by .The machine should be replaced when the annual maintenance cost exceeds the annual depreciation loss. Using your GDC, find the year
in which the machine should be replaced.
Reveal worked solution
. (M1)
. A1 . (M1)
. A1 . (M1)(A1)
. A1 . M1
. A1
. M1
. AGMaintenance
. (M1)(A1)
Set . (M1)
Using GDC tables or graphing intersection for and . (M2)
At , , (A1)
At , , (A1)
Therefore, the machine should be replaced in year . A1