A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child to have $65,000 for his or her education. He plans to set up a perpetual trust fund so that five children will receive this assistance in each generation. He estimates that generations will be spaced 25 years apart. He expects the trust to be able to obtain a 5% rate of return and the first recipients to receive the money 15 years hence. How much money should he now set aside in the trust? Kansas Public Service Company wishes to determine the capitalized worth of a new windmill at an interest rate of 9% and following costs. Purchase $725,000 Installation $143,000 Annual O & M 12,000 Overhaul 260,000 (Year 25) Expected life 40 years Salvage value 32,000 Contributed by Paul R. McCright, University of South Florida

A rather wealthy man decides to arrange for his descendants to be well educated. He wants each child to have $65,000 for his or her education. He plans to set up a perpetual trust fund so that five children will receive this assistance in each generation. He estimates that generations will be spaced 25 years apart. He expects the trust to be able to obtain a 5% rate of return and the first recipients to receive the money 15 years hence. How much money should he now set aside in the trust? Kansas Public Service Company wishes to determine the capitalized worth of a new windmill at an interest rate of 9% and following costs. Purchase $725,000 Installation $143,000 Annual O & M 12,000 Overhaul 260,000 (Year 25) Expected life 40 years Salvage value 32,000 Contributed by Paul R. McCright, University of South Florida

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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