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October 31st, 2013, 06:45 PM  #1 
Newbie Joined: Oct 2013 Posts: 6 Thanks: 0  Economics based on investment
Hi I am in dia need of help on the following question can someone please help. A retired junk yard operator, Edsel Studebaker, recently died and left his entire fortune of $12,300,000toatrusttoestablishajunkcarmuseum. Thetrusteesmustdecidehowtospendit. Landcanbepurchasedfor$180,000now. Themuseumbuildingwillrequire30,000squarefeet 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 ofthe museum will cost $200,000 plus $30 per car. Ifthe funds are invested at 9% per year and the museum is to exist forever, how many cars should the trustees plan to purchase? Any help would be great, cheers. 
October 31st, 2013, 07:02 PM  #2 
Newbie Joined: Oct 2013 Posts: 6 Thanks: 0  Re: Economics based on investment
Sorry the sentence above I've left out a series of spaces. Here is the question again for easier reading. 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 ofthe museum will cost $200,000 plus $30 per car. Ifthe funds are invested at 9% per year and the museum is to exist forever, how many cars should the trustees plan to purchase? 
October 31st, 2013, 10:25 PM  #3 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1039  Re: Economics based on investment Code: YR TRANSACTIONS INTEREST BALANCE 0 12,300,000[1] 280,000[2] 12,020,000 1 1,500,000[3] 1,081,800 11,601,800 2 1,500,000[3] 100,500C[4] 1,044,162 11,145,962  100,500C 3 200,000[5] 30C[6] ? ? Solve for C: .09(11145962  100500C) = 200000 + 30C C = 88.499... so 88 cars 0 12,300,000 280,000 12,020,000 1 1,500,000 1,081,800 11,601,800 2 1,500,000 8,844,000 1,044,162 2,301,962 3 200,000 2,640 207,178 2,306,500 4 200,000 2,640 207,585 2,311,445 [1] from estate [2] right away expenses: 180,000 + 100,000 [3] admin sq. footage: 30,000 @ $100 = 3,000,000: 1,500,000 year1 and year2 [4] per car purchase: 1,000 sq.ft @ $100 = 100,000 + 500 = 100,500 [5] annual operating expenses, beginning year3 [6] per car annual expense, beginning year3 Note that fund increases slightly: due to 88 cars instead of 88.49... Enough for a huge xmas party each year :P 
November 3rd, 2013, 05:47 PM  #4 
Newbie Joined: Oct 2013 Posts: 6 Thanks: 0  Re: Economics based on investment
Thank you so much Denis this is great!! Just one question, to solve for c how did you rearrange the equation to do so? Cheers. 
November 3rd, 2013, 07:42 PM  #5  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1039  Re: Economics based on investment Quote:
but has not teached how to solve such a basic equation? Or did you skip classes in order to go to the poolroom? :P Ok; the equation looks like this: 5(10  2c) = 4 + 3c Multiply what's inside brackets by 5: 50  10c = 4 + 3c ; continue... 13c = 46 c = 46/13 OK?  
November 3rd, 2013, 08:01 PM  #6 
Newbie Joined: Oct 2013 Posts: 6 Thanks: 0  Re: Economics based on investment
Hahahaha Algebra always confused me with the chopping and changing either side of the =, Thank you heaps for your feed back, I appreciate it. 

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