toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will ghway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,700,000, and $331,000 per year in operatin ticipated. In addition, the bridge must be resurfaced every sixth year of its 30-year projected life at a cost of $1,120,000 per occurrence (no resurfacing cost in year 30). Reve ticipated to be $2,600,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the arket (salvage) value for the bridge at the end of 30 years and a MARR of 7% per year, should the toll bridge be constructed? Also, assume that the initial surfacing of the bri vestment costs of the structure. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year. he benefit-cost ratio of the project with PW is. (R More Info 8684 SSAWNIN 2 3 4 5 6 9 10 Given FIP 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 Givenn PIF 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 GIVENT A FIA 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 Given A PIA 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 Givenn AIF 1.0000 0.4831 0.3111 0.2252 0.1739 0.1398 0.1156 0.0975 0.0835 0.0724
toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will ghway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,700,000, and $331,000 per year in operatin ticipated. In addition, the bridge must be resurfaced every sixth year of its 30-year projected life at a cost of $1,120,000 per occurrence (no resurfacing cost in year 30). Reve ticipated to be $2,600,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the arket (salvage) value for the bridge at the end of 30 years and a MARR of 7% per year, should the toll bridge be constructed? Also, assume that the initial surfacing of the bri vestment costs of the structure. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year. he benefit-cost ratio of the project with PW is. (R More Info 8684 SSAWNIN 2 3 4 5 6 9 10 Given FIP 1.0700 1.1449 1.2250 1.3108 1.4026 1.5007 1.6058 1.7182 1.8385 1.9672 Givenn PIF 0.9346 0.8734 0.8163 0.7629 0.7130 0.6663 0.6227 0.5820 0.5439 0.5083 GIVENT A FIA 1.0000 2.0700 3.2149 4.4399 5.7507 7.1533 8.6540 10.2598 11.9780 13.8164 Given A PIA 0.9346 1.8080 2.6243 3.3872 4.1002 4.7665 5.3893 5.9713 6.5152 7.0236 Givenn AIF 1.0000 0.4831 0.3111 0.2252 0.1739 0.1398 0.1156 0.0975 0.0835 0.0724
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
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Question
Transcribed Image Text:A toll bridge across the Mississippi River is being considered as a replacement for the current I-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate
Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,700,000, and $331,000 per year in operating and maintenance costs are
anticipated. In addition, the bridge must be resurfaced every sixth year of its 30-year projected life at a cost of $1,120,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are
anticipated to be $2,600,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the bridge. Assuming zero
market (salvage) value for the bridge at the end of 30 years and a MARR of 7% per year, should the toll bridge be constructed? Also, assume that the initial surfacing of the bridge is included in the initial
investment costs of the structure.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year.
The benefit-cost ratio of the project with PW is (Ro
More Info
N
1
2
3
4
5
6
7
8
9
10
11
12
13
GIVCT
FIP
1.0700
1.1449
1.2250
1.3108
1.4026
1.5007
1.6058
1.7182
1.8385
1.9672
2.1049
2.2522
2 4098
GIVCIT
PIF
0.9346
0.8734
0.8163
0.7629
0.7130
0.6663
0.6227
0.5820
0.5439
0.5083
0.4751
0.4440
0 4150
GIVITA
FIA
1.0000
2.0700
3.2149
4.4399
5.7507
7.1533
8.6540
10.2598
11.9780
13.8164
15.7836
17.8885
201406
GIVITA
PIA
0.9346
1.8080
2.6243
3.3872
4.1002
4.7665
5.3893
5.9713
6.5152
7.0236
7.4987
7.9427
8 3577
GIVITT
AIF
1.0000
0.4831
0.3111
0.2252
0.1739
0.1398
0.1156
0.0975
0.0835
0.0724
0.0634
0.0559
0 0497
GIGIT
ΑΙΡ
1.0700
0.5531
0.3811
0.2952
0.2439
0.2098
0.1856
0.1675
0.1535
0.1424
0.1334
0.1259
0 1197
-
X
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