Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $140,000.Annual maintenance expenses are expected to be $6,500 for the first 7 years and $9,000 each year thereafter up to 25 years. With an interest rate of 6%per year, what is the present worth cost of this project?
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $140,000.Annual maintenance expenses are expected to be $6,500 for the first 7 years and $9,000 each year thereafter up to 25 years. With an interest rate of 6%per year, what is the present worth cost of this project?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $140,000.Annual maintenance expenses are expected to be $6,500 for the first 7 years and $9,000 each year thereafter up to 25 years. With an interest rate of 6%per year, what is the present worth cost of this project?
Expert Solution
Step 1
Given:
Initial cost = 140,000
Annual cost for first 7 years = $6,500
Annual cost from 8 to 25 years = $9,000
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