Question
Corporation X successfully won a contract with Company A. However, in order to provide the service, the corporation must invest heavily in equipment. The project
Corporation X successfully won a contract with Company A. However, in order to provide the service, the corporation must invest heavily in equipment. The project will take nine years to complete at a cost of $24 million per year. The corporation will be able to start providing the service nine years from now, and the first bill will be due 12 months later. The corporation will bill the Company A annually, but it assumes that it wont be able to raise rates for an extremely long time. Assuming a discount rate of 8%, how much would the corporation have to charge Company A to break even if rates must remain constant forever?
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