Accounting

1.      Determine the perpetual equivalent annual worth (in years 1 through infinity) of an investment of $50,000 at time 0 and $50,000 per year thereafter (forever) at an interest rate of 10% per year.

2.      The cash flow associated with landscaping and maintaining a certain monument in Washington, D.C., is $100,000 now and $50,000 every 5 years forever. Determine its perpetual equivalent annual worth (in years 1 through infinity) at an interest rate of 8% per year.

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The cost associated with maintaining rural highways follows a predictable pattern. There are usually no costs for the first 3 years, but thereafter maintenance is required for restriping, weed control, light replacement, shoulder repairs, etc. For one section of a particular highway, these costs are projected to be $6000 in year 3, $7000 in year 4, and amounts increasing by $1000 per year through the highway’s expected 30-year life.

Assuming it is replaced with a similar roadway, what is its perpetual equivalent annual worth (in years] through infinity) at an interest rate of8% per year?

 

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