It is proposed to reconstruct a 10-mile 4-lane highway with flexible pavements in Year 2021. The initial cost (per lane-mile) would be $200,000 and it would have zero salvage value at the end of its service life of 25 years. The annual maintenance cost would be $2,000 per lane-mile, with a 5 percent increase annually. Assume an annual effective discount rate of 4%, calculate the net present agency costs.
It is proposed to reconstruct a 10-mile 4-lane highway with flexible pavements in Year 2021. The initial cost (per lane-mile) would be $200,000 and it would have zero salvage value at the end of its service life of 25 years. The annual maintenance cost would be $2,000 per lane-mile, with a 5 percent increase annually. Assume an annual effective discount rate of 4%, calculate the net present agency costs.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
Problem 2.2CE
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It is proposed to reconstruct a 10-mile 4-lane highway with flexible pavements in Year 2021. The initial cost (per lane-mile) would be $200,000 and it would have zero salvage value at the end of its service life of 25 years. The annual maintenance cost would be $2,000 per lane-mile, with a 5 percent increase annually. Assume an annual effective discount rate of 4%, calculate the net present agency costs.
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