Question: Westchester City is constructing a new city hall The building
Westchester City is constructing a new city hall. The building will cost $ 40,000,000 and is estimated to have a useful life of 40 years. Based on the experience of other similar cities, and the best estimates of the city’s engineers, Westchester’s planners expect that at the end of 40 years the building will have to be torn down and rebuilt, so it is not expected to have any value at the end of 40 years. It will cost $ 6,000,000 to acquire equipment for the new center. Equipment is assumed to last for 10 years. The city estimates that the equipment can be sold for 20 per-cent of its cost at the end of its useful life. If the city undertakes this project, what will the building and equipment expense be in the first year after the center is opened?
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