Answered: Calculate the discounted cash flow for…

Structural Analysis

6th Edition

ISBN:9781337630931

Author:KASSIMALI, Aslam.

Publisher:KASSIMALI, Aslam.

Chapter2: Loads On Structures

Section: Chapter Questions

Problem 1P

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Question

Calculate the discounted cash flow for a 14-km rail line development project
connecting city A with a nearby port B, over a period of 5 years after the year
of construction (t0), assuming an initial capital cost of 180 million euro, a fixed
annual maintenance cost of 0.6 million euro per km and an interest rate of 2%.
Describe how the level of rail transportation service is expected to change over
time assuming that:
(a) A higher initial capital cost is spent to enhance the quality of infrastructure.
(b) Half of the maintenance cost is spent annually.
(c) The traffic demand is annually increasing more than the expected rate.

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