What is the present value of the maintenance costs

Reference no: EM132720424

Question - Atlanta's sewer system is in a terrible state of repair. A company is hired to assess the expected costs to maintain the system over the next 20 years. The company determines that will cost 4 million dollars the first three years, but in year 4 start increasing at a rate of 10% (first 10% increase occurring in year 4). If an interest rate of 8% compounded annually is assumed, what is the present value of the maintenance costs over 20 years?

Reference no: EM132720424

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