How much must you deposit each year into your retirement account starting now and continuing through year 11 if you want to be able to withdraw $75,000 per year forever, beginning 27 years from now? Assume the account earns interest at 14% per year.
1) How much must you deposit each year into your retirement account starting now and continuing through year 11 if you want to be able to withdraw $75,000 per year forever, beginning 27 years from now? Assume the account earns interest at 14% per year.
2)
The State of Chiapas, Mexico, decided to fund a program for improving reading skills in elementary school students. The first cost is $400,000 now and an update amount of $130,000 every 7 years forever. Determine the perpetual equivalent annual cost at an interest rate of 9% per year.
3)
ABC Beverage, LLC, purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is produced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper machines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives.
| Brush Alternative | Bead Blasting Alternative | |
| P | $-400,000 | $-400,000 |
| n | 6 years | large |
| Salvage Value | $50,000 | no value |
| AOC Nonlabor | $-60,000 in year 1, decreasing by $2500 annually starting in year 2 |
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