Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like...

 

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Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $1.2 million each year for the first five years, $1.6 million each year for years 6 through 10, and $1.9 million each year after that. (The building has an indefinite service life.) If the money is placed in an account that will pay 7% interest compounded annually, how large should the gift be? Click the icon to view the interest factors for discrete compounding when i = 7% per year. The gift should be $ million. (Round to two decimal places.] More Info NI 23 + 1 4 5 600 7 8 9 10 Single Payment Compound Present Amount Worth Factor Factor (F/P, i, N) (P/F, i, N) 0.9346 0.8734 1.0700 1.1449 1.2250 1.3108 1.4026 0.8163 0.7629 0.7130 1.5007 1.6058 1.7182 1.8385 1.9672 0.6663 0.6227 0.5820 0.5439 0.5083 Compound Amount Factor (F/A, i, N) 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, i, N) 1.0000 (P/A, i, N) 0.9346 0.4831 1.8080 0.3111 2.6243 0.2252 3.3872 0.1739 4.1002 0.1398 0.1156 0.0975 0.0835 0.0724 4.7665 5.3893 5.9713 6.5152 7.0236 Capital Recovery Factor (A/P, i, N) 1.0700 0.5531 0.3811 0.2952 0.2439 0.2098 0.1856 0.1675 0.1535 0.1424 X Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $1.2 million each year for the first five years, $1.6 million each year for years 6 through 10, and $1.9 million each year after that. (The building has an indefinite service life.) If the money is placed in an account that will pay 7% interest compounded annually, how large should the gift be? Click the icon to view the interest factors for discrete compounding when i = 7% per year. The gift should be $ million. (Round to two decimal places.] More Info NI 23 + 1 4 5 600 7 8 9 10 Single Payment Compound Present Amount Worth Factor Factor (F/P, i, N) (P/F, i, N) 0.9346 0.8734 1.0700 1.1449 1.2250 1.3108 1.4026 0.8163 0.7629 0.7130 1.5007 1.6058 1.7182 1.8385 1.9672 0.6663 0.6227 0.5820 0.5439 0.5083 Compound Amount Factor (F/A, i, N) 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, i, N) 1.0000 (P/A, i, N) 0.9346 0.4831 1.8080 0.3111 2.6243 0.2252 3.3872 0.1739 4.1002 0.1398 0.1156 0.0975 0.0835 0.0724 4.7665 5.3893 5.9713 6.5152 7.0236 Capital Recovery Factor (A/P, i, N) 1.0700 0.5531 0.3811 0.2952 0.2439 0.2098 0.1856 0.1675 0.1535 0.1424 X

Answer rating: 100% (QA)

SOLUTION To determine the size of the gift needed to cover all future expected maintenance costs we ... View the full answer