What will the carpet cost in six years

Reference no: EM132177153

Question - A condo association is required to set aside funds to replicate the common area carpet. The current cost to replace the carpet is $20,000 and it will need to be replaced in six years. The cost of the carpet is expected to increase at the rate of 2% per year. The association can invest in Treasuries yielding 5% paid semiannually.

(a) What will the carpet cost in six years? Show all work.

(b) If the condo association invests in the Treasuries, what semiannual payment is required to have sufficient funds to replace the carpet in six years? Show all work.

Reference no: EM132177153

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