A colleague and you are discussing the possibility of developing a toll road to bypass several...
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A colleague and you are discussing the possibility of developing a toll road to bypass several congested interchanges in a metropolitan area. Rough estimates of the project's traffic, tolls and expenses along with assumptions are listed below: Item Development & Construction Costs in Year 1 Annual Operations & Maintenance Costs starting in Year 2 Total Annual Traffic starting in Year 2 Toll Charged starting in Year 2 O&M growth rate Traffic growth rate Toll growth rate Value $30,000,000 $400,000 750,000 vehicles $4.50 3% 2% 2% If the discount rate is 15% and the period of analysis is 10 years, what is the present value of developing this project? A colleague and you are discussing the possibility of developing a toll road to bypass several congested interchanges in a metropolitan area. Rough estimates of the project's traffic, tolls and expenses along with assumptions are listed below: Item Development & Construction Costs in Year 1 Annual Operations & Maintenance Costs starting in Year 2 Total Annual Traffic starting in Year 2 Toll Charged starting in Year 2 O&M growth rate Traffic growth rate Toll growth rate Value $30,000,000 $400,000 750,000 vehicles $4.50 3% 2% 2% If the discount rate is 15% and the period of analysis is 10 years, what is the present value of developing this project?
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Answer rating: 100% (QA)
Answer To calculate the present value of the toll road project we need to use the time value of money formula which is Present Value Future Value 1 Di... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
Posted Date:
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