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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Not use excel
Transcribed Image Text:The city of New Haven is trying to determine how big its capital budget needs to be
to pay for the construction and on-going maintenance of a new 5 mile stretch of
highway. The section of highway is being built at an initial cost of $1.5 million. The
maintenance and occasional resurfacing of the section of highway are expected to
cost $480000 every 4 years. What is the capitalized cost of the highway at an
interest rate of 11.5% per year? (Note: capitalized cost is a negative number.)
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