A municipality plans to build a new roadway that will decrease the amount of time it takes commuters to get from the South end of the city to the North end. The cost to construct the roadway is $13,900,000 It is estimated that the increased efficiency for commuters has a value of $2.11 per car, per day as a result of the decreased operating costs and less time commuting. The new roadway will be adjacent to a large forest. As a result, there is an expectation that there will be an increase of 12 chipmunk-car collisions each year at an estimated cost of $19,528 per collision. The new roadway will have maintenance requirements that will cost $260,800 per year. The life of the new roadway is 45 years and the discount rate is 5.00% What is the minimum average number of cars per day that must use the new roadway in order for the project to be worthwhile?

A municipality plans to build a new roadway that will decrease the amount of time it takes commuters to get from the South end of the city to the North end. The cost to construct the roadway is $13,900,000 It is estimated that the increased efficiency for commuters has a value of $2.11 per car, per day as a result of the decreased operating costs and less time commuting. The new roadway will be adjacent to a large forest. As a result, there is an expectation that there will be an increase of 12 chipmunk-car collisions each year at an estimated cost of $19,528 per collision. The new roadway will have maintenance requirements that will cost $260,800 per year. The life of the new roadway is 45 years and the discount rate is 5.00% What is the minimum average number of cars per day that must use the new roadway in order for the project to be worthwhile?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 20P: The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting,...

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