Northern Tundra Telephone (NTT) has received a contract to install emergency phones along a new 160-mile section of the Snow-Moose Turnpike. Eighty emergency phone systems will be installed about 2 miles apart. The material cost of a unit is $155. NTT will need to run underground communication lines that cost NTT $7800 per mile (including labor) to install. There will also be a one-time cost of $12,500 to network these phones into NTT’s current communication system. (a) Develop a cost estimate of the project from NTT’s perspective. (b) If NTT adds a profit margin of 40% to its costs, how much will it cost the state to fund the project?
Northern Tundra Telephone (NTT) has received a contract to install emergency phones along a new 160-mile section of the Snow-Moose Turnpike. Eighty emergency phone systems will be installed about 2 miles apart. The material cost of a unit is $155. NTT will need to run underground communication lines that cost NTT $7800 per mile (including labor) to install. There will also be a one-time cost of $12,500 to network these phones into NTT’s current communication system. (a) Develop a cost estimate of the project from NTT’s perspective. (b) If NTT adds a profit margin of 40% to its costs, how much will it cost the state to fund the project?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Northern Tundra Telephone (NTT) has received a contract to install emergency phones along a new 160-mile section of the Snow-Moose Turnpike. Eighty emergency phone systems will be installed about 2 miles apart. The material cost of a unit is $155. NTT will need to run underground communication lines that cost NTT $7800 per mile (including labor) to install. There will also be a one-time cost of $12,500 to network these phones into NTT’s current communication system.
(a) Develop a cost estimate of the project from NTT’s perspective.
(b) If NTT adds a profit margin of 40% to its costs, how much will it cost the state to fund the project?
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