The general city population is set to benefit in travel-time savings from a municipal road project amounting to $14,095,000. The local government will incur an initial spending of $11,500,000 and an annual operating and maintenance cost of $400,000. This new road will cut back the need for annual maintenance on other roads by $150,000. Considering an interest rate of 5%, how many years will it take for this project to break even?

The general city population is set to benefit in travel-time savings from a municipal road project amounting to $14,095,000. The local government will incur an initial spending of $11,500,000 and an annual operating and maintenance cost of $400,000. This new road will cut back the need for annual maintenance on other roads by $150,000. Considering an interest rate of 5%, how many years will it take for this project to break even?

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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A company needs to decide whether or not to proceed with a 8-year project, which is expected to create after-tax cash inflows of $375,000 annually during the 8 years. A $2,000,000 cash outflow would be required at the begininng of the project. If the company requires a 9% return on investment, what is the NPV for this project? 4
The general city population is set to benefit in travel-time savings from a municipal road project amounting to $80,000. The local government will incur an initial spending of $2,500,000 and an operating and maintenance cost of $30,000 per year. This new road will reduce accidents, representing medical savings of $135,000. Consider a 15- year period and an interest rate of 5%. What is the modified benefit-cost ratio of this project?
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A highway is to be built connecting Maud and Bowlegs. Route A follows the old road and costs $4 million initially and $210,000/year thereafter. A new route, B, will cost $6 million initially and $180,000/year thereafter. Route C is an enhanced version of Route B with wider lanes, shoulders, and so on. Route C will cost $9 million at first, plus $260,000 per year to maintain. Benefits to the users, considering time, operation, and safety, are $500,000 per year for A, $850,000 per year for B, and $1,000,000 per year for C. Using a 7% interest rate, a 15-year study period, and a salvage value of 50% of first cost, determine which road should be constructed.
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Explain it early and correctly. Not explain in excel works
You are evaluating a project that costs $75,000 today. The project has an inflow of $160,000 in one year and an outflow of $65,000 in two years. What are the IRRs for the project? What discount rate results in the maximum NPV for this project?
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Improvement to the runways at a regional airport are expected to cost $2million. To pay for the improvements, the airport authority will increase the landing fees of commercial planes. If the airport wants to recover its investment in 4 years, how much money must be generated from the increased fees each year at an interest rate of 8% per year compounded semiannually?
!
A municipality needs to procure funds for a roadway project that has an initial cost of $30M and operating and maintenance costs of $1M that will increase 2% a year with a 20 yr lifetime. The county is going to issue 20-yr bonds with $10,000 face values and a coupon rate of 4% (paid annually). The market interest rate is estimated to be 5% over the project’s time horizon. How many bonds must they issue if they want to cover their entire (present worth) project costs? How much interest will the municipality pay each year for these bonds? Round your answer to the nearest dollar and enter it without commas. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

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