The Local Government is considering building a new bridge. There are three options under consideration. The...
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The Local Government is considering building a new bridge. There are three options under consideration. The below table summarises the predicted financial information for each bridge type, including how many cars are expected to use the bridge each year and the toll that cars will need to pay the government to travel along the bridge. At the end of the bridge's useful life, the government will incur a significant cost to replace the bridge. Which road is the most economical based on the Present Worth (PW) method and a MARR of 10%? Initial Investment Annual Expected Cars per year Toll revenue per car Disposal costs Useful Life ance Costs Road A $40,000,000 $130,000 500,000 $8.00 $9,000,000 20 years Road B $39,000,000 $190,000 500,000 $8.00 $13,000,000 20 years Road C $32,500,000 $160,000 500,000 $8.00 $21,000,000 20 years The Local Government is considering building a new bridge. There are three options under consideration. The below table summarises the predicted financial information for each bridge type, including how many cars are expected to use the bridge each year and the toll that cars will need to pay the government to travel along the bridge. At the end of the bridge's useful life, the government will incur a significant cost to replace the bridge. Which road is the most economical based on the Present Worth (PW) method and a MARR of 10%? Initial Investment Annual Expected Cars per year Toll revenue per car Disposal costs Useful Life ance Costs Road A $40,000,000 $130,000 500,000 $8.00 $9,000,000 20 years Road B $39,000,000 $190,000 500,000 $8.00 $13,000,000 20 years Road C $32,500,000 $160,000 500,000 $8.00 $21,000,000 20 years
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Related Book For
Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
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