How much money should the city borrow

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Reference no: EM131014627

The newly elected city mayor of Gulfsville decides to construct a new levee system near the major river in the town. The estimated life of such a structure will be 40 years. Total initial costs (consulting fees and construction) would be $800,000. Maintenance cost would be $30,000 every 5 years. How much money should the city borrow now in order to carry out the entire project including maintenance? The interest rate is 5%. Illustrate your answer with a cash flow diagram.

Reference no: EM131014627

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