Find the present equivalent value

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Reference no: EM131054530

The property appraisal office for Mobile County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the county commission agreed to purchase the software system. The expectation is the new system will be in operation for the indefinite future. The system has an installed cost of $150,000 and an additional cost of $50,000 after 10 years. The annual software maintenance contract cost is $5000 for the first 4 years and $8000 thereafter. In addition, there will be a recurring major upgrade cost of $15,000 every 13 years. Assume an interest rate of 10% per year for county funds. Find the (a) present equivalent value and (b) the equivalent value for each year hereafter.

Reference no: EM131054530

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