The initial investment in a government-funded city flood control system is $500,000. From the initial year to the endless future, materials, maintenance, electric power, and other running expenditures are estimated to reach $10,000 per year. Every five years, major repairs and rehabilitations will be carried out at a cost of $100,000. What is the project's equivalent capitalized cost if the interest rate is 10% per year?
The initial investment in a government-funded city flood control system is $500,000. From the initial year to the endless future, materials, maintenance, electric power, and other running expenditures are estimated to reach $10,000 per year. Every five years, major repairs and rehabilitations will be carried out at a cost of $100,000. What is the project's equivalent capitalized cost if the interest rate is 10% per year?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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