A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 20 years. Annual maintenance costs for the new bridge are estimated to be $25,000. People will be charged a toll of $0.26 per car to use the new bridge. Annual car traffic is estimated at 410,000 cars. The cost of collecting the toll consists of annual salaries for five collectors at $11,000 per collector. The existing bridge can be refurbished for $1,300,000 and would need to be replaced in 20 years. There would be additional refurbishing costs of $65,000 every five years and regular annual maintenance costs of $18,000 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?

A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 20 years. Annual maintenance costs for the new bridge are estimated to be $25,000. People will be charged a toll of $0.26 per car to use the new bridge. Annual car traffic is estimated at 410,000 cars. The cost of collecting the toll consists of annual salaries for five collectors at $11,000 per collector. The existing bridge can be refurbished for $1,300,000 and would need to be replaced in 20 years. There would be additional refurbishing costs of $65,000 every five years and regular annual maintenance costs of $18,000 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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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