4. A new bridge connecting Tuguegarao and Solana with a 100 year life is expected to have an initial cost of $20 M. The bridge must be resurfaced every five years at a cost of $ 1 M. The annual inspection and operating costs are estimated to be $50, 000. Determine the present cost of the bridge using the capitalized equivalent approach (that is the life of the bridge as infinite), if the interest rate is 10% per compounded annually. Draw the cashflow diagram.
4. A new bridge connecting Tuguegarao and Solana with a 100 year life is expected to have an initial cost of $20 M. The bridge must be resurfaced every five years at a cost of $ 1 M. The annual inspection and operating costs are estimated to be $50, 000. Determine the present cost of the bridge using the capitalized equivalent approach (that is the life of the bridge as infinite), if the interest rate is 10% per compounded annually. Draw the cashflow diagram.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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4. A new bridge connecting Tuguegarao and Solana with a 100 year life is expected to have an initial cost of $20 M. The bridge must be resurfaced every five years at a cost of $ 1 M. The annual inspection and operating costs are estimated to be $50, 000. Determine the present cost of the bridge using the capitalized equivalent approach (that is the life of the bridge as infinite), if the interest rate is 10% per compounded annually. Draw the cashflow diagram.
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