Economics 2. A bridge connecting two towns costs $15,000,000, has an average annual operating cost of $450,000 and a life of 50 years. It requires a onetime major overhaul in 25 years at a cost of $1,800,000. The sponsors of the project can collect an average toll of $2.50 for each passing vehicle. There will be also $3,000, 000 annual benefits to the communities due to time savings and accident reduction from shorter trips. The total (two-way) annual traffic rate is 1,000,000 vehicles. Determine if this public project is justified (i=5%). The project is justified O The project is not justified

Economics 2. A bridge connecting two towns costs $15,000,000, has an average annual operating cost of $450,000 and a life of 50 years. It requires a onetime major overhaul in 25 years at a cost of $1,800,000. The sponsors of the project can collect an average toll of $2.50 for each passing vehicle. There will be also $3,000, 000 annual benefits to the communities due to time savings and accident reduction from shorter trips. The total (two-way) annual traffic rate is 1,000,000 vehicles. Determine if this public project is justified (i=5%). The project is justified O The project is not justified

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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