A new bridge with a 100-year life is expected to have an initial cost of $25 million. This bridge must be resurfaced every ten years at a cost of $2 million. The annual operating costs are estimated to be $55000. Determine the approximate present worth cost of the bridge using the capitalized worth method (take the life of the bridge as infinite). Use interest rate of 15% per year.

A new bridge with a 100-year life is expected to have an initial cost of $25 million. This bridge must be resurfaced every ten years at a cost of $2 million. The annual operating costs are estimated to be $55000. Determine the approximate present worth cost of the bridge using the capitalized worth method (take the life of the bridge as infinite). Use interest rate of 15% per year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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