$100,000 of annual repair is needed to maintain a tunnel. if the interest rate earned on funds held by the city is 7% per year, What is the amount needed today to maintain the tunnel indefinitely (i.e. perpetual basis)?
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- The city is building bridge that will cost 1.2 million dollars today and $25,000 per year to maintain. How much money needs to be invested today at a 10% interest rate to ensure the city has the payments to begin and maintain the project?The construction cost of a permanent water park is $550,000. Annual maintenance and operation costs are $100,000 per year. A) At an interest rate of 7% per year, find the capitalized cost of the park in present worth. (Hint: a capitalized cost is when every cost is brought to present worth, in this case the upfront construction costs are current). B) What would be the annualized cost if the whole project was to be financed over 25 years at 6% interest?A certain government funded city flood control system has an initial investment cost of $500,000. Cost of materials, maintenance, electric power and other operating costs are expected to total $10,000 per year beginning from the first year until the infinite future. Major repairs and rehabilitations will occur every 5 years at a cost of $100,000. If the interest rate is 10% per year, what is the equivalent capitalized cost of this project?
- 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?A bridge that was constructed at a cost of $80,000 is expected to last 50 years, at the end of which time its renewal cost will be $50,000. Annual repairs and maintenance costs are $5,000. What is the capitalized cost of the bridge at an interest rate of 8%?Part of the income that a machine generates is put into a sinking fund to pay for replacement of the machine when it wears out. If $5,000 is deposited every year at 7% interest compounded annually, how many years must the machine be kept before a new machine costing $55,000 can be purchased?
- The following are the costs for one of the alternatives to construct a new bridge: Construction cost = $2200000 M Annual Maintenance cost = $48000 Renovation cost = $800000 every 15 years Based on an interest rate = 5% per year, what is the capitalized cost of this alternative? M RA newly constructed bridge costs $10,000,000. The same bridge is estimated to need renovation every 10 years at a cost of $1,000,000. Annual repairs and maintenance are estimated to be $100,000 per year.(a) If the interest rate is 5%, determine the capitalized-equivalent cost of the bridge.{b) Suppose that the bridge must be renovated every 15 years, not every10 years. What is the capitalized cost of the bridge if the interest rate is thesame as in (a)?(c) Repeat (a) and (b) with an interest rate of 10%. What can you say about the effect of interest on the results?The cost of maintaining a certain permanent monument in Washington, DC occurs as periodic outlays of $2000 every year, $5000 every 3 years. Calculate the capitalized cost of the maintenance using an interest rate of 8% per year.
- A newly constructed water treatment facility costs $2 million. It is estimated that the facility will need revamping to maintain the original design specification every 30 years at a cost of $1 million. Annual repairs and maintenance costs are estimated to be $100,000. At an interest rate of 8%, determine the capitalized cost of the facility, assuming that it will be used for an indefinite period.Annual maintenance costs of a tunnel considered to have an eternal life are $ 500.is worth. The interest rate is considered to be an average of 5% per year. CapitalizedSince the cost is estimated to be $ 15,000, how much is the initial investment cost of the tunnel?can it? (Answer: $ 5,000)The government decides to build a bridge, costing $100 million. A plan has to be made to raise funds for future maintenance costs, which is estimated to be $2 million annually. Assuming that the government can create a trust fund that earns 8% interest annually, how much has to be raised now to cover the annual maintenance costs? O 50 million O 75 million O The fund raised will be insufficient to cover costs O 25 million O 125 million