1) The open-pit mine should fund the account now to pay for maintenance of the tailing pond in perpetuity (after mine shuts down in 20 years). Costs until shutdown are part of mine's operating costs. Maintenance costs start in twenty years at $200,000 annually. How much should be deposited now if fund will earn 6% interest? Suppose maintenance costs do not change.
2) if you drive 10,000 miles per year, which tire must you purchase? Tire A costs $65 and must last 40,000miles. Tire B costs $85 and must last 60,000 miles. You have the outstanding balance on the credit card, and you are paying 18% as the effective annual rate. Find comparable EACs for two alternatives?