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dbn4everloved8
31.03.2020 •
Business
D)The owner of a cemetery plans to offer a perpetual care service for grave sites. The owner estimates that it will cost $150 per year to maintain a grave site. If the interest rate is 8.50%, what one-time fee should the owner charge for the perpetual care service
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Ответ:
The one time fee that the owner should charge is $1764.71
Explanation:
To calculate the one time fee, we take this as a perpetuity and calculate the value or price of the perpetuity based on the fututre cash flows discounted to today's price by a certain dicount rate.
The discount rate is taken as 8.5% which is also the market interests rate.
The formula for the value/price of the perpetuity is,
Value / Price = Cash flow / Discount rate
Value / Price = 150 / 0.085
Value / Price = $1764.705 rounded off to $1764.71
Ответ: