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 $21,000. People will be charged a toll of $0.22 per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $11,000 per collector. The existing bridge can be refurbished for $1,500,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years and regular annual maintenance costs of $20,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 10% 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 10% per year. Choose the correct answer below. A. The maximum acceptable cost of the new bridge is $2,302,268. B. The maximum acceptable cost of the new bridge is $1,709,277. C. The maximum acceptable cost of the new bridge is $1,849,439. D. The maximum acceptable cost of the new bridge is $997,689. E. The maximum acceptable cost of the new bridge is $1,609,613.
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 $21,000. People will be charged a toll of $0.22 per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $11,000 per collector. The existing bridge can be refurbished for $1,500,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years and regular annual maintenance costs of $20,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 10% 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 10% per year. Choose the correct answer below. A. The maximum acceptable cost of the new bridge is $2,302,268. B. The maximum acceptable cost of the new bridge is $1,709,277. C. The maximum acceptable cost of the new bridge is $1,849,439. D. The maximum acceptable cost of the new bridge is $997,689. E. The maximum acceptable cost of the new bridge is $1,609,613.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
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 $21,000. People will be charged a toll of $0.22
per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists
of annual salaries for six collectors at $11,000 per collector. The existing bridge can be refurbished for $1,500,000
and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years
and regular annual maintenance costs of $20,000 for the existing bridge. There would be no toll to use the
refurbished bridge. If MARR is 10% 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 10% per year.
Choose the correct answer below.
...
O A. The maximum acceptable cost of the new bridge is $2,302,268.
B. The maximum acceptable cost of the new bridge is $1,709,277.
C. The maximum acceptable cost of the new bridge is $1,849,439.
D. The maximum acceptable cost of the new bridge is $997,689.
O E. The maximum acceptable cost of the new bridge is $1,609,613.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education