Pollution control equipment for a pulverized coal cyclone furnace is estimated to cost $190,000 two years from now and an additional $120,000 four years from now. If Monongahela Power wants to set aside enough money now to cover these future costs, how much must be invested at an interest rate of 8% per year, compounded semiannually?
What will be an ideal response?
P = 190,000(P/F,4%,4) + 120,000(P/F,4%,8)
= 190,000(0.8548) + 120,000(0.7307)
= $250,096
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