A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $25,000. People will be charged a toll of $0.29 per car to use the new bridge. Annual car traffic is estimated at 390,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $12,000 per collector. The existing bridge can be refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $75,000 every five years and regular annual maintenance costs of $21,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 15% per year, what is the maximum acceptable cost (X) of the new bridge? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. Choose the correct answer below. O A. The maximum acceptable cost of the new bridge is $976,079. O B. The maximum acceptable cost of the new bridge is $2,166,975. OC. The maximum acceptable cost of the new bridge is $1,638,694. O D. The maximum acceptable cost of the new bridge is $1,496,573. O E. The maximum acceptable cost of the new bridge is $1,703,741.
A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $25,000. People will be charged a toll of $0.29 per car to use the new bridge. Annual car traffic is estimated at 390,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $12,000 per collector. The existing bridge can be refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $75,000 every five years and regular annual maintenance costs of $21,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 15% per year, what is the maximum acceptable cost (X) of the new bridge? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. Choose the correct answer below. O A. The maximum acceptable cost of the new bridge is $976,079. O B. The maximum acceptable cost of the new bridge is $2,166,975. OC. The maximum acceptable cost of the new bridge is $1,638,694. O D. The maximum acceptable cost of the new bridge is $1,496,573. O E. The maximum acceptable cost of the new bridge is $1,703,741.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $25,000. People will be charged a
toll of $0.29 per car to use the new bridge. Annual car traffic is estimated at 390,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $12,000 per collector. The existing bridge can be
refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $75,000 every five years and regular annual maintenance costs of $21,000 for the existing
bridge. There would be no toll to use the refurbished bridge. If MARR is 15% per year, what is the maximum acceptable cost (X) of the new bridge?
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year.
Choose the correct answer below.
A. The maximum acceptable cost of the new bridge is $976,079.
O B. The maximum acceptable cost of the new bridge is $2,166,975.
OC. The maximum acceptable cost of the new bridge is $1,638,694.
O D. The maximum acceptable cost of the new bridge is $1,496,573.
O E. The maximum acceptable cost of the new bridge is $1,703,741.
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