The Reliance Volunteer Fire Company wants to take advantage of a state program to save money to purchase a new fire truck. The truck will cost $210,000, and members of the finance committee estimate that with community and state contributions, they can save $4,000 per month in an ordinary annuity paying 10.8% annual interest. How long will it take to save for the truck? It will take months to save for the truck. (Round up to the nearest month.)

The Reliance Volunteer Fire Company wants to take advantage of a state program to save money to purchase a new fire truck. The truck will cost $210,000, and members of the finance committee estimate that with community and state contributions, they can save $4,000 per month in an ordinary annuity paying 10.8% annual interest. How long will it take to save for the truck? It will take months to save for the truck. (Round up to the nearest month.)

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 state of Glottamora has $100 million remaining in its budget for the current year. One alternative is to give Glottamorans a one-time tax rebate. Alternatively, two proposals have been made for state expenditures of these funds. The first proposed project is to invest in a new power plant, costing $100 million and having an expected useful life of 20 years. Projected benefits accruing from this project are as follows:YEARS BENEFITS PER YEAR ($ MILLIONS)1–5 06–20 20The second alternative is to undertake a job retraining program, also costing $100 million and generating the following benefits:YEARS BENEFITS PER YEAR ($ MILLIONS)1–5 206–10 1411–20 4The state Power Department argues that a 5 percent discount factor should be used in evaluating the projects because that is the government’s…
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