Second Assigment

1. A concrete and building materials company is trying to bring the company-funded portion of its employee retirement fund into compliance with HB-301. The company has already deposited $20,000 in each of the last 5 years. How much must be deposited now in order for the fund to have $350,000 three years from now, if the fund grows at a rate of 15% per year? Burlington Northern is considering the elimination of a railroad grade crossing by constructing a dual-track overpass. The railroad subcontracts for maintenance of its crossing gates at $11,500 per year. Beginning 4 years from now, however, the costs are expected to increase by $1000 per year into the foreseeable future (that is, $12,500 4 years from now, $13,500 five years from now, etc.). The overpass will cost $1,4 million (now) to build, but it will eliminate 100% of the auto-train collisions that have cost an average of $250,000 per year. If the railroad uses a 10-year study period and an interest rate of 10% per year, determine whether the railroad should build the overpass.

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Metropolitan Water Utilities purchases surface water from Elephant Butte Irrigation District at a cost of $100,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $800,000 at the end of the year (i.e., end of December) for the water it used. The delayed payment essentially represents a subsidy by the irrigation district to the water utility. At an interest of 0.25% per month, what is the amount of the subsidy? Metalfab Pump and Filter projects that the cost of steel bodies for certain valves will increase by $2 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year period at an interest rate of 3% per quarter?