The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $68,000. He estimates that in subsequent years the annual repair costs will decline by $7000, making the second-year cost $61,000; the third-year $54,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 6%.

The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $68,000. He estimates that in subsequent years the annual repair costs will decline by $7000, making the second-year cost $61,000; the third-year $54,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 6%.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 78IIP

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