The city anticipates that it can earn 5 on the investment


The City of Chicago is considering building a park. The initial cost of the park is $125,000 and the estimated annual operating cost is $8,000. Every ten years it is anticipated that major maintenance will be required at a cost of $25,000. The city is seeking a donor who would provide an initial amount that would fund the park forever (infinite service life). The city anticipates that it can earn 5% on the investment and would name the park for the donor. How much would the donor have to provide?

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Finance Basics: The city anticipates that it can earn 5 on the investment
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