Question

A municipality needs $35,000,000 in 30 years to replace their wastewater treatment plant. Assuming interest rate...

A municipality needs $35,000,000 in 30 years to replace their wastewater treatment plant. Assuming interest rate is 5% (accrued annually), how much money would this municipality need to invest today to have the money available for this project in 30 years?
(b) This investment proves too large for this municipality as a single lump sum. How much money would the same municipality need to put back on an annual basis to ensure they have the $35,000,000 in 30 years, again assume the interest rate is 5% (accrued annually).
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Answer #1

let me know if you need any clarification..

ans a
we have to use financial calcualtor to solve this problem
Put in calculator
FV 35000000
PMT 0
I 5%
N 30
compute PV ($8,098,210.70)
therefore investment required = $8,098,210.70
ans b
we have to use financial calcualtor to solve this problem
Put in calculator
FV 35000000
PV 0
I 5%
N 30
compute PMT ($526,800.23)
therefore investment required per annum= $526,800.23
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