A company currently spends $4,295 on operating and maintenance costs per year. They expect these cost to increase by $1,111 for the next 5 years. What is the equivalent annual cost of these O & M costs if the MARR is 8.1%?

equivalent annual cost = $7,455.39

Explanation:

current costs $4,295

costs in 1 year = $5,406

costs in 2 years = $6,517

costs in 3 years = $7,628

costs in 4 years = $8,739

costs in 5 years = $9,850

first we must calculate the PV of operating and maintenance costs for years 1 through 5 = $29,688.92

equivalent annual cost = PV / PV annuity factor

PV annuity factor, 8.1%, 5 periods = 3.98221

equivalent annual cost = $29,688.92 / 3.98221 = $7,455.39

A. People earning $35,000 pay 10% tax, while people earning $100,000 pay 30% tax

Explanation:

Progressive tax is characterized by the percentage difference in collection, which will vary according to income. This way, people with higher incomes will pay a higher tax and people with lower incomes will pay a lower tax rate. Typically, this type of tax has multiple tiers of tax for various types of income. In contrast, regressive tax is characterized by the charging of a homogeneous percentage rate of all persons, regardless of income. Thus, people with lower incomes will pay proportionally more in relation to their income than the richer ones, so it is considered a regressive tax. Therefore the only alternative that represents a progressive tax is alternative (A), where the tax rate is different for income levels. Those with $ 35,000 income will pay 10% and those with higher income $ 100,000 will pay 35% tax.