A city council has estimated that it has a surplus of $100 Million (M). The council is exploring the following three projects, each of which costs $100 M.

A bridge which takes five years to build, then yields $50M benefit per year for the next 10 years. The benefits are received at the end of each year. Assume that the costs are spread out evenly over the five years (i.e. year 1 to year 5) and are paid at the end of each year.

Assuming the discount rate of 5 percent, calculate the following?

Discounted Benefit?

Answer rating: 100% (QA)

Project Details Project cost100 million Bridge benefit per year50 million Bridge construction years5 ... View the full answer