Question 4 Part E: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Amount $175,000 $10,000 $80,000 Year incurred Year O Per year, forever Major Maintenance Costs First in year 5, then every 5 years forever Question 4 Part E: Provide the cost for the project. Enter your answer in the form 123456
Question 4 Part E: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Amount $175,000 $10,000 $80,000 Year incurred Year O Per year, forever Major Maintenance Costs First in year 5, then every 5 years forever Question 4 Part E: Provide the cost for the project. Enter your answer in the form 123456
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 4 Part E: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will
always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and
maintain the perpetual project? Interest rate is 6%.
Costs
Initial Cost
Annual Operating & Maintenance Costs
Amount
$175,000
$10,000
$80,000
Year incurred
Year O
Per year, forever
Major Maintenance Costs
First in year 5, then every 5 years forever
Question 4 Part E: Provide the cost for the project. Enter your answer in the form 123456
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