An airport expansion that is expected to be used indefinitely is under way at Jackson Hole Metro Airport. Land acquisition and major earthworks that will last as long as the airport is used are expected to cost $600 million. Terminal construction that will last 20 years is budgeted at $200 million. (Assume that the terminal is to be identically replaced every 20 years.) Runway construction will cost $150 million. The runways will also be used indefinitely, with repaving required every 10 years at a cost of $10 million. The operating and maintenance costs are estimated to be $15 million per year. What is the annual cost of the project if i = 5% and the airport will be used indefinitely?
An airport expansion that is expected to be used indefinitely is under way at Jackson Hole Metro Airport. Land acquisition and major earthworks that will last as long as the airport is used are expected to cost $600 million. Terminal construction that will last 20 years is budgeted at $200 million. (Assume that the terminal is to be identically replaced every 20 years.) Runway construction will cost $150 million. The runways will also be used indefinitely, with repaving required every 10 years at a cost of $10 million. The operating and maintenance costs are estimated to be $15 million per year. What is the annual cost of the project if i = 5% and the airport will be used indefinitely?
Cornerstones of Cost Management (Cornerstones Series)
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ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter19: Capital Investment
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An airport expansion that is expected to be used indefinitely is under way at Jackson Hole Metro Airport. Land acquisition and major earthworks that will last as long as the airport is used are expected to cost $600 million. Terminal construction that will last 20 years is budgeted at $200 million. (Assume that the terminal is to be identically replaced every 20 years.) Runway construction will cost $150 million. The runways will also be used indefinitely, with repaving required every 10 years at a cost of $10 million. The operating and maintenance costs are estimated to be $15 million per year. What is the annual cost of the project if i = 5% and the airport will be used indefinitely?
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