Question: A privately run, for-profit, prison is considering ways in which it can cut its monthly costs and therefore increase profit. One idea it is considering
| A privately run, for-profit, prison is considering ways in which it can cut its monthly costs and therefore increase profit. | ||||||||||
| One idea it is considering is to pay a judge to guarantee convicted prisoners in poor health win their appeals and are set free. | ||||||||||
| The prison believes it can realize the monthly cost savings below over the initial year of the plan. What is the present | ||||||||||
| value of the first year's monthly cost savings? Assume a discount rate of 8%.
THE ANSWER IS REQUIRED IN A SMALL BOX, so there needs to be a formula answer that says $49,701 | ||||||||||
| Month | Savings ($) | |||||||||
| 1 | 3,500 | |||||||||
| 2 | 6,000 | |||||||||
| 3 | 6,500 | |||||||||
| 4 | 9,000 | |||||||||
| 5 | 9,000 | |||||||||
| 6 | 9,000 | |||||||||
| 7 | 9,400 | |||||||||
| 8 | 9,800 | |||||||||
| 9 | 4,800 | |||||||||
| 10 | 5,000 | |||||||||
| 11 | 2,000 | |||||||||
| 12 | 3,500 | |||||||||
| Total | 77,500
| |||||||||
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