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A retired junk yard operator, Edsel Studebaker, recently died and left his entire fortune of $12,300,000 to a trust to establish a junk car museum. The trustees must decide how to spend it. Land can be purchased for $180,000 now. The museum building will require 30,000 square feet of administrative and work space. Each car displayed will require an additional 1000 square feet. Planning will cost $100,000 immediately. Building construction will cost $100 per square foot and will take the next two years (assume equal costs each year.) Cars will cost $500 each (they're junk, remember?) and they will be purchased during the second year of construction. Annual operation of the museum will cost $200,000 plus $30 per car. If the funds are invested at 9% per year and the museum is to exist forever, how many cars should the trustees plan to purchase?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91572693

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