Future maintenance costs for the fieldhouse

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Reference no: EM131808516

Plans for the UB fieldhouse are progressing quickly with construction expected to start within the year. A group of university donors want to contribute to these efforts by providing a single donation today that will cover the future maintenance costs of the building. The building architects have estimated that maintenance costs will be $700,000 each year for the first five years, 910,000 for years 6 through 10, and $1.05 million for each year thereafter. UB plans on keeping this building in service for ever (i.e. the building has an indefinite service life). Donated monies will be placed in an account that pays 4% interest compounded annually. How much would the donors need to contribute to cover all future maintenance costs for the fieldhouse?

-Are we finidng present of future value since cash flow didnt start from 0

Reference no: EM131808516

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