The Public Service Board (PSB) awarded two contracts worth a combined $3.07 million to increase the depth of a retention basin and reconstruct a spillway that was severely damaged in a flood 2 years ago. The PSB president stated that, surprisingly, the bids were $1,150,000 lower than PSB engineers estimated. If the projects are assumed to have a 20-year life, what is the annual worth of the savings at an interest rate of 5% per year?
The Public Service Board (PSB) awarded two contracts worth a combined $3.07 million to increase the depth of a retention basin and reconstruct a spillway that was severely damaged in a flood 2 years ago. The PSB president stated that, surprisingly, the bids were $1,150,000 lower than PSB engineers estimated. If the projects are assumed to have a 20-year life, what is the annual worth of the savings at an interest rate of 5% per year?
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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The Public Service Board (PSB) awarded two contracts
worth a combined $3.07 million to increase
the depth of a retention basin and reconstruct a
spillway that was severely damaged in a flood
2 years ago. The PSB president stated that, surprisingly,
the bids were $1,150,000 lower than PSB
engineers estimated. If the projects are assumed to
have a 20-year life, what is the annual worth of the
savings at an interest rate of 5% per year?
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