Question
Maintenance money for a new building has been sought. Mr. Price would like to make a donation to cover all future expected maintenance costs for
Maintenance money for a new building has been sought. Mr. Price would like to make a donation to cover all future expected maintenance costs for the new building. These maintenance costs are expected to be 50,000 for the first increasing by 2000 per year for the first 10 years, 70000 for the 11th year increasing by 3% per year for the following 20 years and 130000 each year after that. There is also an additional overhauling cost of 200000 for the building every 20 years. The donation will be placed in an account that will pay 12% interest.
A- Detetermine the amount of this donation
B. What is the equivalent annual maintenance cost over the infinite service life of the building
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