An Engineering Research foundation wishesto set up a trust fund earning 10%compounded annually to• provide P 2,585,373 for the lot andbuilding and P 1,110,477 for the initialequipment of a Structural Engineering andMaterials Laboratory;• pay P 445,919 for the annual operatingcost every year; and• pay P 503,831 for the purchase of newequipment and replacement of someequipment every 6 years beginning 6 yearsfrom now.How much money should be paid into thefund for the building and equipment and topay for perpetual operation and equipmentreplacement?

The PV analysis is used to measure the profitability of a project by discounting its future cash…

Answered: An Engineering Research foundation…

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 corporation creates a sinking fund in order to have $910,000 to replace some machinery in 8 years. How much should be placed in this account at the end of each month if the annual interest rate is 6.8% compounded monthly? (Round your answers to the nearest cent.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 2, 4, and 6 years. 2 years S 4 years S 6 years S How much interest was earned during the second month of the 6th year? S
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