Question: A newly constructed bridge costs $ 3 2 , 0 0 0 , 0 0 0 . The same bridge is estimated to need renovation

A newly constructed bridge costs $ 32,000,000. The same bridge is estimated to need renovation every 20 years at a cost of $ 13,500,000. Annual repairs and maintenance are estimated to be $ 2,700,000 per year.
(a) If the interest rate is 12%, determine the capitalized cost of the bridge.
(b) Suppose that in (a), the bridge must be renovated every 25 years, not every 20 years . What is the capitalized cost of the bridge?
(c) Repeat (a) and (b) with the interest rate of 16%. What can you say about the effect of interest on the results.

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