A manufacturing plant will cost one million dollars now; five hundred thousand in years one and two. It will be completed at the end of year two. Beginning in year three, maintenance costs will be one hundred thousand per year through year ten. From years eleven on, maintenance costs will be one hundred fifty thousand dollars per year forever. Find the present worth of all of the costs if i = 10%. Round answer to whole dollars with no decimal points. Do not enter $ sign.

A manufacturing plant will cost one million dollars now; five hundred thousand in years one and two. It will be completed at the end of year two. Beginning in year three, maintenance costs will be one hundred thousand per year through year ten. From years eleven on, maintenance costs will be one hundred fifty thousand dollars per year forever. Find the present worth of all of the costs if i = 10%. Round answer to whole dollars with no decimal points. Do not enter $ sign.

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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A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two, and amounts increasing by $500 per year through year 15. At an interest rate of 0.08 per year, the present worth of the maintenance cost is nearest to Note: The given interest is already in decimal form. Do not round in between solution. Final answer round to the nearest whole number
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