Capitalized Equivalent Worth
Maintenance money for a new building has been sought. Mr. Kendall...

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Capitalized Equivalent Worth
Maintenance money for a new building has been sought. Mr. Kendall would like to make a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $50,000 each year for the first 5 years, $70,000 each year for years 6 through 10, and $90,000 each year after that. (The building has an indefinite service life.)
(a) If the money is placed in an account that will pay 13% interest compounded annually, how large should the gift be?
(b) What is the equivalent annual maintenance cost over the infinite service life of the building?

David · Accepted Answer

Maintenance money for a new building has been sought. Mr. Kendall would like to make a donation to 
cover all future expected maintenance costs for the building. These maintenance costs are expected to 
be $50,000 each year for the first 5 years, $70,000 each year for years 6 through 10, and $90,000 each 
year after that. (The building has an indefinite service life.) 
(a) If the money is placed in an account that will pay 13% interest compounded annually,

Capitalized Equivalent Worth Maintenance money for a new building has been sought. Mr. Kendall would like to make a donation to cover all future expected maintenance costs for the building. These...

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