A city plans to upgrade its storm water management infrastructure by installing newpipes. The installation costs 2.7 million dollars and the annual maintenance cost is$27,000. Every 8 years, the system needs to be fully examined which requires a fixedmanagement and material cost of $20,000 and a variable labor cost at the rate of $27/hr.20 full time (working 8 hours per day) workers will be employed for 80 days for this task.If the infrastructure has a life time of 96 years and the city's interest rate is 7%,(Please round your answer to two decimal places at the million level for bothquestions, e.g. '1.23' millions)a. what is the capitalized worth of the project (in millions)? Please note that the valuecould be negative.

In this we need to find the present value of all cost required during the life of project.

Answered: city plans to upgrade its storm water…

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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