Urban infrastructures that support a community are sometimes in the news; we seldom think about them except when there is a disruption of service. A small city has just replaced a water storage tank and associated feeders from it throughout the community. It is estimated that the annual service requirements will be $40,000 the first year, with $10,000 increases in each subsequent year for 8 years. The community's time value of money is 4%.

Determine the present worth of these maintenance expenses using each of two different methods. This will serve as a check on your work.

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Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is +50.

Determine the future worth of these maintenance expenses at the end of year 8.

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A multinational company begins operations in a country with a developing economy. It will invest $3,000,000 to begin operations and will pay operating costs $200,000 in year 1. Annual operating costs are expected to rise by 4% due to the growing strength of the country's currency. How much would the company need to set aside to cover the costs described above over the next 4 years assuming money was invested in an account that earned 6% annual interest?

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A pair of "noise sniffers" is sought by a city utility for identifying noise in their electrical distribution system. One sniffer is for detection from longer distances, and the other is for up-close precision identification of the specific defective component such as a fuse or lightning arrestor. The total cost is $10,000. Budgets are tight and the city desires to pay over 2 years at a nominal annual rate of 12 percent.

What is the amount of each equal payment if made at the end of each month? Nominal annual rate of 12 is compounded monthly.

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