B. Badang Builder Sdn. Bhd. has won a tender to build a 10km toll road. Initial cost of the project is RM 4,000,000. The main contractor will pay RM 20,000 for the operational cost every 3 months to the subcontractor for 2 years. The road needs to carry out resurfacing works every 5 years with a cost of RM 400,000. It is expected that the road can be completed at the end of year 2. After completion, annual operational cost for the road is about RM 100,000 forever. The company wishes to estimate the minimum annual income from the toll collection for a period of 15 years. The company asks you to do this analysis. Assume that the growth rate is 10% per year compounded annually

B. Badang Builder Sdn. Bhd. has won a tender to build a 10km toll road. Initial cost of the project is RM 4,000,000. The main contractor will pay RM 20,000 for the operational cost every 3 months to the subcontractor for 2 years. The road needs to carry out resurfacing works every 5 years with a cost of RM 400,000. It is expected that the road can be completed at the end of year 2. After completion, annual operational cost for the road is about RM 100,000 forever. The company wishes to estimate the minimum annual income from the toll collection for a period of 15 years. The company asks you to do this analysis. Assume that the growth rate is 10% per year compounded annually

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 15P

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