The Road agency is planning to build a new bridge and is considering two distinct configurations....

 

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The Road agency is planning to build a new bridge and is considering two distinct configurations. The initial costs and annual costs and benefits for each bridge are shown in the following table. The bridges are each expected to give positive returns within 10 years and the rate of return expected 14%. Which would you choose and why. Initial cost Alternative I $ 6,000,000.00 15,000.00 Annual maintenance and operating $ costs Annual benefits Annual benefits less costs Alternative II $ 10,500,000.00 10,000.00 $ $ 1,200,000.00 $ 1,185,000.00 $ 1,900,000.00 $ 1,890,000.00 The Road agency is planning to build a new bridge and is considering two distinct configurations. The initial costs and annual costs and benefits for each bridge are shown in the following table. The bridges are each expected to give positive returns within 10 years and the rate of return expected 14%. Which would you choose and why. Initial cost Alternative I $ 6,000,000.00 15,000.00 Annual maintenance and operating $ costs Annual benefits Annual benefits less costs Alternative II $ 10,500,000.00 10,000.00 $ $ 1,200,000.00 $ 1,185,000.00 $ 1,900,000.00 $ 1,890,000.00

Answer rating: 100% (QA)

To determine which bridge to choose we need to calculate the Net Present Value NPV for each a... View the full answer