Calibration of new production equipment

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Mary Chong, capital expenditure manager for PDA Manufacturing, knows that her company is facing a series of monthly expenses associated with installation and calibration of new production equipment. The company has $1 million in a bank account right now that it can draw on to meet these expenses. Funds in this account earn 6% interest annually, with monthly compounding. Ms Chong is preparing a budget that will require the company to make equal monthly deposits into their bank account, starting next month, to ensure that they can pay the repair costs they anticipate over the next 24 months (shown as follows). How much should the monthly bank deposit be? Months Repair Costs per Month 1–4 $100,000 5–12 $200,000 13–24 $500,000.

Reference no: EM13811695

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