Respuesta :
Answer:
If the corporation wants to set up a trust fund to pay for this ball field expense for years to come, the amount should be $52,240,714.40
Explanation:
According to the given data we have the following:
Cost of Project = $50,000,000
Annual Maintenance Cost = $100,000
Present Value of Annual Maintenance Cost = $100,000 / 0.06
Present Value of Annual Maintenance Cost = $1,666,666.67
The Renovation is required every 50 years at a cost of $10,000,000
Therefore, Present Value Renovation = $10,000,000/1.06^50 + 10,000,000/1.06^100 +
Present Value Renovation = $(10,000,000/1.06^50) / (1 - 1/1.06^50)
Present Value Renovation = $10,000,000 / (1.06^50 - 1)
Present Value Renovation = $574,047.73
Therefore, Total Present Value = $50,000,000 + 1,666,666.67 + 574,047.73
Total Present Value = $52,240,714.40
If the corporation wants to set up a trust fund to pay for this ball field expense for years to come, the amount should be $52,240,714.40
