The government of Ghana is to construct a new 60km highway concrete road from Accra to Winneba.
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Question:
The government of Ghana is to construct a new 60km highway concrete road from Accra to Winneba. The road is to be constructed just 200 meters away from the coast line in order to ensure coast-to-coast ride that is devoid of any traffic. The road will take 4 years to construct and will cost in total $600 million at the end of the construction period. The concrete surface will last for 40 years and have an estimated annual maintenance cost of $60,000 starting at the end of the sixth year. What is the net present value (NPV) of the road project if the government of Ghana uses a discount rate of 8% per year for road projects?
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