Problem $1($Break$-$even Analysis$)$

A state highway department is planning the construction of a toll road.

Construction cost will be $$300M($at period$=$year $0).$ Annual maintenance is

estimated to be $$1M$ every year from year $1$ and in perpetuity $($forever$).$ In addition,

a major resurfacing will have to be carried out at a cost of $$10M$ every $10$ years in

perpetuity $($forever$).$ It is estimated that $5$ M vehicles per year will use the road

starting in year $1$ and in perpetuity $($forever$)$ and each vehicle will pay a constant

toll $$t.$ Show the $($indicative$)$ cash flow diagram for this project. Use Annual Worth

Analysis to determine what breakeven constant toll $$t$ should be charged to each

vehicle to make sure benefits will be economically equivalent to costs. MARR $=$

$10\frac{\%}{?}$ year.

Note: Excel can not be used for an infinite horizon