The State of Chiapas, Mexico, decided to fund a program for improving reading skills in elemen­tary school students. The first cost is $300,000 now, and an update amount of $100,000 every 5 years forever. Determine the perpetual equiva­lent annual cost at an interest rate of 10% per year.

What will be an ideal response?


AW = -300,000(0.10) – 100,000(A/F,10%,5)
= -30,000 – 100,000(0.16380)
= $-46,380

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