Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd phase is projected to cost the remaining $47.5 million. It is expected to be completed at the end of the 2-year period following planning & design.b. The roadway to be constructed is projected to cost $125,000 per lane mile. It will need to begin construction 12 months prior to the project’s estimated completion date. Your government controls the permitting process for the roadway and has already issued the necessary permits. The total roadway project will be paid for at its completion.c. At the same time as the interchange is being constructed, the bridge project must also be underway. The bridge is projected to cost $48 million. It will also need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $5.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd phase is projected to cost the remaining $42.5 million. Its construction is also expected to be completed at the end of the 2-year period following planning & design. Unlike the roadway, there will need to be a payout of 30% of the cost of construction at the end of the 1st year of the construction project. The remaining 70% will be paid at the completion of the project.Assuming a discount rate of 4.25% and monthly compounding, what amount will need to be funded today to meet the complete project’s funding requirements on the payment due dates.

Question

Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.
a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd phase is projected to cost the remaining $47.5 million. It is expected to be completed at the end of the 2-year period following planning & design.
b. The roadway to be constructed is projected to cost $125,000 per lane mile. It will need to begin construction 12 months prior to the project’s estimated completion date. Your government controls the permitting process for the roadway and has already issued the necessary permits. The total roadway project will be paid for at its completion.
c. At the same time as the interchange is being constructed, the bridge project must also be underway. The bridge is projected to cost $48 million. It will also need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $5.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd phase is projected to cost the remaining $42.5 million. Its construction is also expected to be completed at the end of the 2-year period following planning & design. Unlike the roadway, there will need to be a payout of 30% of the cost of construction at the end of the 1st year of the construction project. The remaining 70% will be paid at the completion of the project.

Assuming a discount rate of 4.25% and monthly compounding, what amount will need to be funded today to meet the complete project’s funding requirements on the payment due dates.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Finance

Related Finance Q&A

Find answers to questions asked by students like you.

Q: One year​ ago, your company purchased a machine used in manufacturing for $115,000. You have learned...

A: Calculation of NPV of Replacement:To calculate the NPV of Replacement, follow the below steps:

Q: Your firm is offered credit terms of 1/10, net 35. What is the effective annual interest rate on thi...

A: Calculating the value of effective interest rate on the credit terms. We have,Effective interest rat...

Q: You just won the lottery. You and your heirs will receive $40,000 per year forever, beginning 10 yea...

A: PV today, of a perpetuity starting a year from now is given by = P / r where P = perptuity amount an...

Q: Hot Bagels Inc. has been experiencing declining earnings but has just announced a 50 percent salary ...

A: Calculating the number of directors can be elected by the dissident stockholders with proxies they n...

Q: Suppose that the value of an investment in the stock market has increased at an average compound rat...

A: Calculation of Worth of Investment Today:With the current year being 2016, there are totally 112 yea...

Q: The company stock increases dividend by 5% each year and the expecteddividend in 5 years is $5. Anal...

A: Suppose the recent dividend paid=$xDividend in year 1=x*(1+growth rate)Dividend in year 2=x*(1+growt...

Q: Until August 1971, industrialized countries around the world maintained a fixed exchange rate of the...

A: Answer 1:The correct answer is “Forward exchange rate”.Justification:  A forward exchange rate is wh...

Q: You work for a pharmaceutical company that has developed a new drug. The patent on the drug will las...

A: Calculation of Present Value of New Drug:The present value is calculated using the present value of ...

Q: The law of one price The theory of purchasing power parity (PPP) states that in the long-run exchang...

A: We have:Cost of a scanner in England : GBP 65.45Spot Rate: 1GBP = $2.0145Required: Calculate price o...

Q: An experiment can result in any of the outcomes 1, 2, or 3.  If there are two different wagers with ...

A: Let's define two matrix as shown on white board.The first matrix is R matrix which shows three possi...

Q: NoGrowth Corporation currently pays a dividend of $2.00 per​ year, and it will continue to pay this ...

A: Cost of Equity: It is the cost of the company while raising finance by issuing equity. It is earning...

Q: Could you show me to solve this problem step by step. Please

A: The equation we have to solve is as shown on the white board. We will take the following approach.As...

Q: A stock currently trades for $115. January call options with a strike price of $100 sell for $16, an...

A: Recall the call pur parity equation in case of a European option:C + PV (K) = S + PWhere C = Price o...

Q: Participation #7:   Why are ROE and EPS such important measures of performance to investors?

A: Let's recall that an (equity) investor is the last one in the pecking order to get the returns. They...

Q: Better Mousetraps has developed a new trap. It can go into production for an initial investment in e...

A: Calculation of Increase in Project NPV:

Q: Year       Cash Flow (I)   Cash Flow (II)    0            $51,000            $14,400    1           ...

A: Part (a)Profitability Index, PI  = PV of future cash flows / Initial investmentPV of a cash flow, Ci...

Q: Use the continuous compound interest formula to find the indicated value P = $2,570; r = 3.14%; t = ...

A: Continuous Compound Interest Method:The continuous compound interest method is the method of calcula...

Q: Assume that you were recently hired as assistant to Jerry Lehman, financial VP of Coleman Technologi...

A: Note:Since we are entitled to answer up to 3 sub-parts, we shall answer the first 3 as you have not ...

Q: Assume Technical Investors is thinking about three different size offerings for issuance of addition...

A: The percentage underwriting spread for each size offer is calculated as follows:Percentage underwrit...

Q: Consider Commodity Z, which has both exchange-traded futures and option contracts associated with it...

A: There is a specific relationship that exists between the call premium  and the put premium for an un...

Q: dpb corporate bonds have a coupon rate of 9.2% APR (sa). The yeild to maturity is 8.5% APR (Sa). the...

A: Semi annual payments. Hence the period here is semi annual or half year. Hence, n = 2 x years to mat...

Q: I asked this question before, and got an answer, but I have a question about the response that was g...

A: The formula that you shared from the textbook is used for time-value-of-money calculations. Such a f...

Q: What is the future value in 12 years of $1,000 payments received at the beginning of each year for t...

A: As a first step, let's gather all the information that question has to offer.Annuity investment = A ...

Q: A) Use the appropriate formula to find the value of the annuity. B) Find the interest. Periodic ...

A: Part (a)If an annuity A is paid at the end of period over N periods and bears a discount (interest) ...

Q: Tip Top Hats (TTH) is expected to grow at a 4 percent rate for as long as it is in business. Current...

A: a)Calculation of Cost of Retained Earnings:Here “D1” denotes the dividends for the next year, “P0”de...

Q: Assume that the agreed-upon price is $90,000. What is the expected profiton the contract assuming th...

A: In the earlier part, the marginal cost for hospital 4 was calculated as $ 71,468 Marginal cost / pat...

Q: Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: ...

A: Note:Since we are entitled to answer up to 3 sub-parts, we shall answer the first 3 as you have not ...

Q: What is the current price of a zero-coupon bond with a 7 percent yield to maturity that matures in 2...

A: Two assumptions are required before we proceed to calculate the price of the zero coupon bond:1. Let...

Q: Ed Draycutt is the engineering manager of Airway Technologies, a firm that makes computer systems fo...

A: You have asked a case sudy with four sub parts. I will answer the first three sub parts. Please post...

Q: 1. AAI, Inc., forecasts unit sales for a potential new product as follows: Year Units of Output 95,0...

A: Please see the table below. Since all the steps are sequential, I have converted the same into a tab...

Q: Use the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not sel...

A: The tax payer is not self employed. He will therefore be governed by the employee's tax rates.Income...

Q: Samuel Johnson invested in gold U.S. coins ten years ago, paying $216.53 for one-ounce gold "double ...

A: The formula to determine the annual rate of return:Where,FV denotes the future valuePV denotes the p...

Q: Inzaghi Company recently hired you as a consultant to estimate the company’s WACC. You have obtained...

A: WACC is the weighted average cost of capital. The same can be calculated as:WACC = Wd x Kd x (1 - T)...

Q: What finances do you need to have to achieve getting somewhere with Cosmetology?  For instance to bu...

A: Some essential costs that are needed to be assessed before building a salon are:Cosmetics: A salon h...

Q: Let C be the price of a call option that enables its holder to buy one share of a stock at an exerci...

A: Given that, K is the exercise price, S is stock price at time 0.

Q: Please show how to get the missing values step by step

A: Part (1)Please see the white board. 

Q: I got an answer of 6.2% for this question, Can you confirm or deny my answer? R.S. Green has 250,000...

A: The final answer is 6.16% that can be rounded off to 6.2%. Hence, your answer is correct.Let's assig...

Q: Tomneed to have $15,000 in five years to pay offa home equity loan. If Tom were to invest in an acco...

A: Tom needs $15000 in 5 years. He has to make one deposit now that will get an interest of 5.75% compo...

Q: Participation #3:   Discuss mortgage loans in terms of the time value of money and loan amortization...

A: A mortgage loan originates when an asset is purchased with loan. The mortgage loan is repaid in inte...

Q: if you are 18 years old, deposit $5000 each year into a traditional IRA for 52 years, at 6% interest...

A: Annuity, A = $ 5,000Interest rate per year, R = 6%Period, N = 52 years

Q: I already ask this but I whant know how you do the calculation, please could you show me all the ste...

A: Calculating the price of bond if bond mature in 10 year. We have,Price of bond = C [1- (1 / (1+r)n ]...

Q: Your stock goes down 5.3%, then up 1.4%, and up again 4.7% over a 3 day period. What was the average...

A: We have:Day                                                     Percentage Increase (+)/Decrease (-)...

Q: A store will give you a 4.00% discount on the cost of your purchase if you pay cash today. Otherwise...

A: Let's assume the cost of purchase is C. On immediate payment,Discount = 4%Hence, the discounted cost...

Q: Could you please give me a brief overview of what "cash flow for ROR analysis" is? Thanks.

A: ROR analysis is a short form for Rate of Return Analysis.Under ROR analysis, we need to find that Ra...

Q: The manufacturer of a product that a variable cost of $2.50 per unit and total fixed cost of $125,00...

A: The manufacturer of a product that a variable cost of $2.50 per unit and total fixed cost of $125,00...

Q: A ten-year bond, with par value equals $1000, pays 10% annually. If similar bonds are currently yiel...

A: Calculation of market value of bonds: Excel spreadsheet:

Q: The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Nominal...

A: Part (a)Approach:As a first step we will calculate of mean of nominal returns.We then proceed to cal...

Q: You have $150,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a ...

A: Let w be the proportion invested in stock X and the balance (1 - w) be invested in stock Y to  creat...

Q: The four different bond ratings below have a yeild to maturity for 10 year bonds. Baa 9.40% Ba1 9.60...

A: The bonds of Parrot Corp. were rated as Baa  and issued at par a few weeks ago. The yiled correspond...

Q: The Nickelodeon Manufacturing Co. has a series of $1000 par value bonds outstanding. Each bond pays ...

A: a)Calculation of Current Price of Bonds with 3 years maturity:Excel Spreadsheet: