Gillian has developed estimates for strengthening the undercarriage on a medium-use, 70-year-old bridge for which there is no budget to replace the bridge for the next 5 years. Estimates are P = $800,000, S = 0, maintenance cost, M&O = $10,000 per year, n = 5 years. Use a spreadsheet and MARR of 2% per year to do the following:

(a) Determine what the project will cost in PW terms.

(b) During the analysis, Gillian learned that some 25 similar projects had been completed over the last 10 years. With the help of her supervisor, Gillian obtained the information below on the first cost, P, and maintenance cost, M&O, for these projects. Repeat the PW evaluation using expected values for these two estimates. Is PW higher or lower than the value in part (a)?

(c) Assume the bridge is strengthened and administratively moved to the toll division, which promises a net revenue of $180,000 per year above the M&O cost. Is the project economically justified at the first cost of $800,000? What is the projected response from the driving public to the toll on this 70-year-old bridge?

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First Cost, $ M&O Cost, $ per Year Range, $1000 Midpoint, Number of Range, Midpoint, Number of $1000 Projects $1000 $1000 Projects 500–600 0-4 550 2 3 600–700 650 6. 4-8 15 700-800 750 3 8-12 10 3 800-900 850 4 12–16 14 4 1000–1100 1050 1100–1200 1150 1300–1400 1350 1