regional municipality is studying a water supply plan for its tri-city and surrounding area to the end of year 2070. To satisfy the water demand, one suggestion is to construct a pipeli ke some distance away. Construction would start at the beginning of 2030 and take five years at a cost of $15 million per year. The cost of maintenance and repairs starts after com nstruction and for the first year is $3 million, increasing by 2 percent per year thereafter. At an interest rate of 9 percent, what is the present worth of this project? Assume all cash fil year-end. Consider the present to be the end of 2025/beginning of 2026. Assume there is no salvage value at the end of year 2070. lick the icon to view the table of compound interest factors for discrete compounding periods when i = 9%.
regional municipality is studying a water supply plan for its tri-city and surrounding area to the end of year 2070. To satisfy the water demand, one suggestion is to construct a pipeli ke some distance away. Construction would start at the beginning of 2030 and take five years at a cost of $15 million per year. The cost of maintenance and repairs starts after com nstruction and for the first year is $3 million, increasing by 2 percent per year thereafter. At an interest rate of 9 percent, what is the present worth of this project? Assume all cash fil year-end. Consider the present to be the end of 2025/beginning of 2026. Assume there is no salvage value at the end of year 2070. lick the icon to view the table of compound interest factors for discrete compounding periods when i = 9%.
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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Transcribed Image Text:A regional municipality is studying a water supply plan for its tri-city and surrounding area to the end of year 2070. To satisfy the water demand, one suggestion is to construct a pipeline from a major
lake some distance away. Construction would start at the beginning of 2030 and take five years at a cost of $15 million per year. The cost of maintenance and repairs starts after completion of
construction and for the first year is $3 million, increasing by 2 percent per year thereafter. At an interest rate of 9 percent, what is the present worth of this project? Assume all cash flows take place
at year-end. Consider the present to be the end of 2025/beginning of 2026. Assume there is no salvage value at the end of year 2070.
Click the icon to view the table of compound interest factors for discrete compounding periods when i = 9%.
The present worth of this project is $ million.
(Round to two decimal places as needed.)
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