We want to donate a marble birdbath to the city park as a memorial to cats. We also want to set up a perpetual care fund to cover future expenses “forever”. The initial cost of the bath is $5000. Routine annual operating costs are $200 per year, but every fifth year the cost will be $500 to cover major cleaning and maintenance as well as operation.
a) What is the capitalized cost of this project if the interest rate is 8%.
b) How much is the present worth of this project if it is to be demolished after 75 years? The final $500 payment in the 75th year will cover the year’s operating cost and the site reclamation.