A city planning commission is analyzing a project to determine its capitalized cost. The project is a water park that has an initial cost of $11,000,000.00 and operating and mainte- nance costs of $100,000.00 in the first year increasing by $10,000.00 a year for five years, and then the operating and maintenance costs return to $100,000.00 per year for the infinite life. The water park will generate profits of $1,300,000.00 per year. The interest rate is 13%. Determine the capitalized cost of the water park using net present worth analysis.
A city planning commission is analyzing a project to determine its capitalized cost. The project is a water park that has an initial cost of $11,000,000.00 and operating and mainte- nance costs of $100,000.00 in the first year increasing by $10,000.00 a year for five years, and then the operating and maintenance costs return to $100,000.00 per year for the infinite life. The water park will generate profits of $1,300,000.00 per year. The interest rate is 13%. Determine the capitalized cost of the water park using net present worth analysis.
Chapter1: Making Economics Decisions
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A city planning commission is analyzing a project to determine its capitalized cost. The project is a water park that has an initial cost of $11,000,000.00 and operating and mainte- nance costs of $100,000.00 in the first year increasing by $10,000.00 a year for five years, and then the operating and maintenance costs return to $100,000.00 per year for the infinite life. The water park will generate profits of $1,300,000.00 per year. The interest rate is 13%.
Determine the capitalized cost of the water park using net present worth analysis.
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