I have $5,000 in my account today and plan to add $3.000 per period for the...

 

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I have $5,000 in my account today and plan to add $3.000 per period for the next three years. (Four payments total) In how many periods (from today) will this amount grow to $20.000 if the interest rate is 6%? New York State DOT is choosing between two pavement construction options for a road segment. Option A's total initial cost is $1,500,000, including materials and labor. It has annual maintenance cost of $20,000/mile, and a useful service life of 16 years. At the end of the pavement's service life, the cost of decommissioning is $60,000. Option B has an initial cost $1,000,000, annual maintenance cost $25,000/mile, and a useful service life of 12 years with a decommissioning cost of $40,000. If the interest rate is 8%. how long does the road segment need to be for option A to be the better choice? I have $5,000 in my account today and plan to add $3.000 per period for the next three years. (Four payments total) In how many periods (from today) will this amount grow to $20.000 if the interest rate is 6%? New York State DOT is choosing between two pavement construction options for a road segment. Option A's total initial cost is $1,500,000, including materials and labor. It has annual maintenance cost of $20,000/mile, and a useful service life of 16 years. At the end of the pavement's service life, the cost of decommissioning is $60,000. Option B has an initial cost $1,000,000, annual maintenance cost $25,000/mile, and a useful service life of 12 years with a decommissioning cost of $40,000. If the interest rate is 8%. how long does the road segment need to be for option A to be the better choice?

Answer rating: 100% (QA)

SOLUTION To determine the number of periods required for an amount to grow to 20000 with a given interest rate we can use the future value formula for ... View the full answer