If you are a city engineer and you know that you will need $25 million in 3 years to' replace toll booths on a toll road in the city. Traffic on the road is estimated to be 20 million vehicles per year. How much per vehicle should the toll be to cover the cost of the toll booth replacement project? Interest is 10%. (assume that the toll receipts are received at the end of each year in a lump sum.) A. $0.38 per vehicle В. $0.88 per vehicle С. $0.28 per vehicle

If you are a city engineer and you know that you will need $25 million in 3 years to' replace toll booths on a toll road in the city. Traffic on the road is estimated to be 20 million vehicles per year. How much per vehicle should the toll be to cover the cost of the toll booth replacement project? Interest is 10%. (assume that the toll receipts are received at the end of each year in a lump sum.) A. $0.38 per vehicle В. $0.88 per vehicle С. $0.28 per vehicle

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

See similar textbooks

Related questions

Q: new school building was recently built in the area. The entire cost of the project was…

A: We will first have to determine the amount of annual payments towards the loan. The loan is an…

Q: A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive…

A: Annuity refers to series of equal payments that are made either at start o end of specific interval…

Q: Calculate the MIRR for the following projects with a discount and reinvestment rate of 12%: Project…

A: The modified internal rate of return is used in capital budgeting to evaluate the profitability of…

Q: How much money will be available for the project in 41/2 years? (Round your answer to the nearest…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: could you help with this homework question? The project you manage require $10,000 in capital…

A: Cost-benefit analysis is a sensitivity analysis that helps in evaluating the benefits of a project…

Q: A local government awards a landscaping company a contract worth $1.30 million per year for five…

A: The cost of equipment can be calculated as the present value of annuity

Q: Kermit is considering purchasing a new computer system. The purchase price is $132,738. Kermit will…

A: The present worth of an investment or money is computed using the present value concept of the time…

Q: A business sets up a sinking fund so they will have a $66,000.00 to pay for a replacement piece of…

A: Time value of money :— According to this concept, value of money in present day is greater than the…

Q: A local Dunkin’ Donuts franchise must buy a new piece of equipment in 4 years that will cost…

A: Future value required (FV) = $81000 Interest rate = 16% Quarterly interest rate (r) = 16%/4 = 4%…

Q: The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will…

A: Price of the bond is the present value of future cashflow.

Q: After seeing its neighboring village obtain a new water tower, the city board of East Dubuque begins…

A: Time Period = 20 Years Interest rate = 9% compounded daily Future Value = $1,750,000

Q: The city is building bridge that will cost 1.2 million dollars today and $25,000 per year to…

A: According to the time value of money concept, the value of money in the future will be less worth…

Q: A new school building was recently built in the area. The entire cost of the project was…

A: Cost of the project = $26,000,000.APR of 3.3%Time duration - 30 yearTotal families 17000

Q: A local retail franchise must buy a new piece of equipment in 6 years that will cost $89,000. The…

A: Payment per period can be calculated using PMT function in excel. PMT(rate, nper, pv, [fv],…

Q: he average annual cost of damages caused by floods to certain subdivision located along Pasig River…

A: Annuity: this is used in case of a future annuity – suppose an equal sum of money is invested in the…

Q: The FernRod Motorcycle Company invested $150,000 at 4.5% compounded monthly to be used for the…

A: When amount is invested to earn compound interest for a certain period, it involves the computation…

Q: $100,000 of annual repair is needed to maintain a tunnel. if the interest rate earned on funds held…

A: The PV of a payment series is used to find out the actual worth of the payments assuming they are…

Q: The Odessa Supply Company is considering obtaining a loan from a sales finance company secured by…

A: The problem requires the calculation of annual financial costs. It does not only consider interest…

Q: The FernRod Motorcycle Company invested $350,000 at 4.5% compounded monthly to be used for the…

A: Given information, Investment amount(P)=$350,000 Time(t)=5.5 years Compounded monthly (m)=12…

Q: To be able to begin a highway project, state regulations require that the money must be set aside at…

A: The amount to be invested at the beginning of the project i.e. at time 0 = Present value of all…

Q: The Rustin Transportation Planning Board estimates the cost of upgrading a 4-mile section of 4-lane…

Q: what is the annualized cost of the bridge project? C

A: Given in the question: Cost of the bridge 600 Million Annual Costs 200,000 Interest…

Question

If you are a city engineer and you know that you will
need $25 million in 3 years to' replace toll booths on a
toll road in the city. Traffic on the road is estimated to
be 20 million vehicles per year. How much per vehicle
should the toll be to cover the cost of the toll booth
replacement project? Interest is 10%. (assume that the
toll receipts are received at the end of each year in a
lump sum.)
A.
$0.38 per vehicle
В.
$0.88 per vehicle
С.
$0.28 per vehicle

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A business sets up a sinking fund so they will have a $68,000.00 to pay for a replacement piece of equipment in 12 years when the current equipment will be sold for scrap. If they make deposits at the end of each quarter for 12 years in the investment that pays 6.3% compounded quarterly, what size should each payment be? Answer: The quarterly payments are $. (Round to the nearest cent/penny)
A $3.6 million state lottery pays $15,000 at the beginning of each month for 20 years. How much money must the state actually have in hand to set up the payments for this prize if money is worth 5.3%, compounded monthly?
A state highway department is considering a bypass loop that is expected to save motorists $821,000 per year in gasoline and other automobile-related expenses. However, local businesses will experience revenue losses estimated to be $131,000 each year. The cost of the loop will be $8,900,000. Calculate the conventional B/C ratio using an interest rate of 7% per year and a 10-year project period.
Show step by step
The department of transport will collect 5$ toll from each vehicle to recover the cost of a newly- built highway. In the first year (end of year 1), 10,000 cars are expected to use the highway followed by 4% annual increase in traffic due to the expansion of the city. Determine the equivalent present worth of this project over 20 years' time and at an interest rate of 8%?
K 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 $27,000. 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 $9,000 per collector. The existing bridge can be refurbished for $1,400,000 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 $17,000 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 10per year. Choose the correct answer below. .... A. The maximum acceptable cost of the new bridge is $1,668,576.…
The Odessa Supply Company is considering obtaining a loan from a sales finance company secured by inventories under a field warehousing arrangement. Odessa would be permitted to borrow up to $320,000 under such an arrangement at an annual interest rate of 10 percent. The additional cost of maintaining a field warehouse is $20,000 per year. Assume that there are 365 days per year. Determine the annual financing cost of a loan under this arrangement if Odessa borrows the following amounts: $320,000. Round your answer to two decimal places. % $240,000. Round your answer to two decimal places. %
Kermit is considering purchasing a new computer system. The purchase price is $131,870. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $7,452 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $78,952 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system? Enter your answer in this format: 12345
The FernRod Motorcycle Company invested $150,000 at 4.5% compounded monthly to be used for the expansion of their manufacturing facilities. How much money will be available for the project in 5 1/2 years? (Round your answer to the nearest dolla

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS