Civil Engineering consulting firms that provide services to outlying communities are vulnerable to a number of factors that affect the financial condition of the communities, such as bond issues, real estate developments, etc. A small consulting firm entered into a fixed-price contract with a spec home builder, resulting in a stable income of $320,000 per year in years 1 through 4. At the end of that time, a mild recession slowed the development, so the parties signed another contract for $150,000 per year for two more years. Determine the present worth of the two contracts at an interest rate of 10% per year.
Civil Engineering consulting firms that provide services to outlying communities are vulnerable to a number of factors that affect the financial condition of the communities, such as bond issues, real estate developments, etc. A small consulting firm entered into a fixed-price contract with a spec home builder, resulting in a stable income of $320,000 per year in years 1 through 4. At the end of that time, a mild recession slowed the development, so the parties signed another contract for $150,000 per year for two more years. Determine the present worth of the two contracts at an interest rate of 10% per year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Civil Engineering consulting firms that provide
services to outlying communities are vulnerable to
a number of factors that affect the financial condition
of the communities, such as bond issues, real
estate developments, etc. A small consulting firm
entered into a fixed-price contract with a spec
home builder, resulting in a stable income of
$320,000 per year in years 1 through 4. At the end
of that time, a mild recession slowed the development,
so the parties signed another contract for
$150,000 per year for two more years. Determine
the present worth of the two contracts at an interest
rate of 10% per year.
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