What the equivalent present cost is

Reference no: EM132157816

Question: The council members of a small town have decided that the earth levee that protects the town flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $85,000. He estimates that in subsequent years the annual repair costs will decline by $10,000, making the second-year cost $75,000; the third-year $65,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 4%.

Reference no: EM132157816

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