Reference no: EM131806670

Question: A car company has decided to spend $150,000,000 on a museum for exhibiting its classic cars. Land can be purchased for $500,000. The museum building will require 30,000 square feet of general space, while each car displayed will require an additional 1000 square feet. The design and planning process will cost $100,000, which should be paid immediately. The construction of the building will cost $600 per square foot, and the building will be completed within the next 2 years, while the cost of construction will be distributed evenly between the 2 years of construction. All cars will be purchased during the second year of construction at an average cost of $120,000 per car. The annual operation of the museum will cost $2,000,000 plus $30,000 per car. If the funds are invested at 9% per year and the museum is to exist forever, how many cars should the trustees plan to purchase? Contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology.