The Rustin Transportation Planning Board estimates the cost of upgrading a 4-mile section of 4-lane highway from public use to toll road to be $85 million now. Resurfacing and other maintenance will cost $550,000 every 3 years. Annual revenue is expected to average $18.5 million for the foreseeable future. If i = 8% per year, what is (a) the capitalized cost now, and (b) the equivalent A value of this capitalized cost? Explain the meaning of the A value just calculated.
The Rustin Transportation Planning Board estimates the cost of upgrading a 4-mile section of 4-lane highway from public use to toll road to be $85 million now. Resurfacing and other maintenance will cost $550,000 every 3 years. Annual revenue is expected to average $18.5 million for the foreseeable future. If i = 8% per year, what is (a) the capitalized cost now, and (b) the equivalent A value of this capitalized cost? Explain the meaning of the A value just calculated.
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
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Transcribed Image Text:The Rustin Transportation Planning Board estimates the cost of upgrading a 4-mile section of 4-lane highway from public use to toll road to be
$85 million now. Resurfacing and other maintenance will cost $550,000 every 3 years. Annual revenue is expected to average $18.5 million for
the foreseeable future. If i = 8% per year, what is (a) the capitalized cost now, and (b) the equivalent A value of this capitalized cost? Explain the
meaning of the A value just calculated.
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