A bridge would cost $50 million to build (this cost must be incurred now). After its built,
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A bridge would cost $50 million to build (this cost must be incurred now). After it’s built, starting next year, the bridge will last for 50 years. Each year when the bridge is in use, we expect it to generate $2.5 million worth of benefits and cost $0.3 million per year to perform maintenance. The interest rate is 5%. Should we build this bridge? Show your calculations and explain your decision (to build or not to build).
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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