At present, a foundation that has 6 million deposits in the bank with the interest of 10% compounded annually, is planning to build a project that will last for a long period of time. The project will require an initial cost of P8.5 million four years from now, annual maintenance would be P200,000 for the first 5 years and will increase by P10,000 every year for the next 10 years, and then the maintenance will be P300,000 per year for the rest of its life. A major repair is estimated to be P1.5 million every 8 years to start 10 years after construction. Determine the amount to be deposited at the end of each year for five years, starting three years from now, to sustain the cost of the proje
At present, a foundation that has 6 million deposits in the bank with the interest of 10% compounded annually, is planning to build a project that will last for a long period of time. The project will require an initial cost of P8.5 million four years from now, annual maintenance would be P200,000 for the first 5 years and will increase by P10,000 every year for the next 10 years, and then the maintenance will be P300,000 per year for the rest of its life. A major repair is estimated to be P1.5 million every 8 years to start 10 years after construction. Determine the amount to be deposited at the end of each year for five years, starting three years from now, to sustain the cost of the proje
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 6E
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At present, a foundation that has 6 million deposits in the bank with the interest of 10% compounded annually, is planning to build a project that will last for a long period of time. The project will require an initial cost of P8.5 million four years from now, annual maintenance would be P200,000 for the first 5 years and will increase by P10,000 every year for the next 10 years, and then the maintenance will be P300,000 per year for the rest of its life. A major repair is estimated to be P1.5 million every 8 years to start 10 years after construction. Determine the amount to be deposited at the end of each year for five years, starting three years from now, to sustain the cost of the project.
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