How much money is required in the trust fund for engineering

Reference no: EM13199718

A trust fund is to be established for providing the costs associated with a small engineering laboratory. The following costs are required for the engineering laboratory.

(1) The construction cost is 800000 and the initial equipment cost is 300000.

(2) the annual laboratory operating cost is 100000 for the first 3 years and 120000 thereafter(forever),

(3) the cost of equipment replacement is 150000 every 6 years, beginning 6 years from now. How much money is required in the trust fund now to build the engineering laboratory and maintain its perpetual operation and equipment replacement? The interest rate is 5% per year.

Reference no: EM13199718

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