Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / A car company has decided to spend S 150M on a TS a museum for exhibiting its classic cars
A car company has decided to spend S 150M on a TS a museum for exhibiting its classic cars. Land can be purchased for $500,000. The museum building will require 30,000 square feet of general space while each car displayed will require an additional 1000 square feet. The design and planning process will cost $100,000, which should be paid immediately. The construction of the building will cost $600 per square foot, and the building will be completed within the next 2 years, while the cost of construction will be distributed evenly between the 2 years of construction. All cars will be purchased during the second year of construction at an average cost of $120,000 per car. The annual operation of the museum will cost $200,000 plus $30,000 per car. If the funds are invested at 9% per year and the museum is to exist forever, how many cars can the trustees purchase?
After 1st year
Fundbalance=13500000−500000−100000−9000000=3900000Fundbalance=13500000−500000−100000−9000000=3900000
After 2nd year
Fundbalance=13500000−9000000=4500000Fundbalance=13500000−9000000=4500000
Totalfunds=Fundbalanceafter1styear+Fundbalanceafter2ndyear=3900000+4500000=8400000Totalfunds=Fundbalanceafter1styear+Fundbalanceafter2ndyear=3900000+4500000=8400000
Totalcars=TotalfundsAveragecost=8400000120000=70
please see the attached file for the complete solution.
