The Province of Manitoba will commence a large infrastructure project worth $$60 million. It will be built over a two-year period, with expected costs of $10 million today, $25 million at the end of first year, and $25 million in the second year. The expected operating life of the infrastructure is 15 years, and the expected net revenue (before tax) is $5 million each year. The after-tax MARR is 10%. The tax rate is 35% and the CCA rate is 30%. There is no salvage value to the project after 15 years. a.) Compute the before-tax Present Worth (or cost) of the project. [whole dollar] b.) Compute the after-tax Present Worth (or cost) of the project. [whole dollar]

The Province of Manitoba will commence a large infrastructure project worth $$60 million. It will be built over a two-year period, with expected costs of $10 million today, $25 million at the end of first year, and $25 million in the second year. The expected operating life of the infrastructure is 15 years, and the expected net revenue (before tax) is $5 million each year. The after-tax MARR is 10%. The tax rate is 35% and the CCA rate is 30%. There is no salvage value to the project after 15 years. a.) Compute the before-tax Present Worth (or cost) of the project. [whole dollar] b.) Compute the after-tax Present Worth (or cost) of the project. [whole dollar]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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