Multiple Choice
A municipality has just completed the construction of a bridge. It was calculated that operating and maintenance (O&M) costs of this bridge will be $20 000 in the first year with a 5% increase each year thereafter for the next 4 years. The interest rate used in calculations was 7.5% per year. What interest rate should be used to calculate the present worth of O&M costs over 5 years if we use the geometric series to present worth conversion factor?
A) 1.9%
B) 2.4%
C) 5.0%
D) 7.5%
E) 8.2%
Correct Answer:
Verified
Correct Answer:
Verified
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