# The local garbage company charges \$6 a month for garbage collection. It had been their practice to send out bills

## Question:

The local garbage company charges \$6 a month for garbage collection. It had been their practice to send out bills to their 100,000 customers at the end of each 2-month period. Thus, at the end of February it would send a bill to each customer for \$12 for garbage collection during January and February.
Recently the firm changed its billing date: it now sends out the 2-month bills after one month's service has been performed. Bills for January-February, for example, are sent out at the end of January. The local newspaper points out that the firm is receiving half its money before the garbage collection. This unearned money, the newspaper says, could be temporarily invested for one month at 1% per month interest by the garbage company to earn extra income.
Compute how much extra income the garbage company could earn each year if it invests the money as described by the newspaper. (Answer: \$36,000)

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Related Book For

## Engineering Economic Analysis

ISBN: 9780195168075

9th Edition

Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle

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