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8 December, 14:10

The owner of a cemetery plans to offer a perpetual care service for grave sites. The owner estimates that it will cost $120 per year to maintain a grave site. If the interest rate is 8 percent, what one-time fee should the owner charge for the perpetual care service

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  1. 8 December, 14:21
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    One-time fee is $1,500

    Explanation:

    The perpetual care service is an annuity to the owner

    and the one-time fee is a present value therefore to calculate it we will use Present value Annuity fomula

    PV = c/r

    = $120/0.08

    = $1,500
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