The town of Covington is planning to build a pedestrian/bicycle bridge across a stream at a local park. The initial cost of the bridge is estimated at S400,000 with annual maintenance of $12,000. The bridge must be resurfaced every 12 years at a cost of $100,000 and must be painted every 6 years at a cost of $25,000. If the expected life of the bridge is 60 years, what is the EAC at i=4%?

The town of Covington is planning to build a pedestrian/bicycle bridge across a stream at a local park. The initial cost of the bridge is estimated at S400,000 with annual maintenance of $12,000. The bridge must be resurfaced every 12 years at a cost of $100,000 and must be painted every 6 years at a cost of $25,000. If the expected life of the bridge is 60 years, what is the EAC at i=4%?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 78IIP

See similar textbooks

Similar questions

The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
Green County is planning to construct a bridge across the south branch of Carey Creek to facilitate traffic flow though Clouser Canyon. The first cost for the bridge will be $9,500,000. Annual maintenance and repairs the first year of operation, estimated to be $10,000, are expected to increase by $1000 each year thereafter. In addition to regular maintenance, every 5 years the roadway will be resurfaced at a cost of $750,000, and the structure must be painted every 3 years at a cost of $100,000. If Green County uses 5% as its cost of money and the bridge is expected to last for 20 years, what is the EUAC?
In building a highway, the district engineer is faced with the alternatives of building a four-lane underpass that would take care of all future needs of building a two-lane underpass now and a second two-lane underpass 20 years later. The four-lane underpass would cost 400,000 and has a maintenance cost of 10,000 per year during the 40 years it is expected an underpass will be needed. The two-lane underpass will cost 270,000 each and each would have a maintenance cost of 8,000 per year. if financing costs are 5%, which alternative should be adopted and compute the difference of its equivalent present worth. assume zero salvage value for each alternative at the end of 40 years. Use present worth method.
A municipality is planning on constructing a water treatment plant at an initial cost of $10,000,000. Every 5 years, major repairs and cleanup are required at a cost of $2,000,000. Due to the necessity to remove sludge and make minor repairs, annual costs of operating the treatment plant are estimated to be $700,000, $775,000, $850,000, $925,000, and $1,000,000 each year leading up to the 5-year major repair and cleanup. Based on a 4%/year TVOM, what is the capitalized cost for the water treatment plant?
In building a highway, the district engineer is faced with the alternatives of building a 4-lane underpass that would take care of all future needs of building or a 2-lane underpass now and a second underpass 20 years later. For the 4-lane underpass:First cost = ₱ 400,000Annual maintenance cost = ₱ 10,000No salvage valueFor the 2-lane underpass:First cost = ₱ 270,000Annual maintenance cost = ₱ 8,000No salvage valueWhich of the following gives us the best alternative that should be adopted by showing the difference of its equivalent present worth
After seeing its neighboring village obtain a new water tower, the city board of East Dubuque begins planning to replace its water towers. The board estimates that it will need $1,750,000 to build the new water towers in 20 years. At this time, the city board plans to assess its 2753 homeowners with a one-time flat fee surcharge and the n invest the money received in a CD paying 9% interest compounded daily(use n=360) for 20 years. a.) How much money will the board need to raise at this time to meet the city’s water tower needs at the end of 20 years? b.) Before applying the surcharge, the city board receives a federal grant of $100,000 toward the water tower investment. Taking this grant into account, how much should the surcharge be on each homeowner?
A city has decided to build a sofiball complex, and the city council has already voted to fund the project at the level of $800,000 (initial capital investment). The city engineer has collected the following financial information for the complex project:• Annual upkeep costs: $120.000• Annual utility costs: $13,000• Renovation costs: $50,000 for every five years• Annual team user fees (revenues): $32,000• Useful life: Infinite• interest rate: 8%lf the city can expect 40.000 visitors to the complex each year, what should be the minimum ticket price per person so that 1he city can break even'?
The city is building bridge that will cost 1.2 million dollars today and $25,000 per year to maintain. How much money needs to be invested today at a 10% interest rate to ensure the city has the payments to begin and maintain the project? Please explain in as detail as possible.
A town is deciding whether to invest in a new recycling truck. The truck will cost ₱125,00 and will be used for 10 years, at which time it is estimated that it will have a salvage value of ₱40,000. Maintenance costs are estimated to be a uniform gradient of ₱1,000 starting from year 2. Assuming a MARR of 18% per year, what is the annual capital recovery for the truck?
A city is planning a new pipeline to supply water from distant mountains. The planning horizon chosen is 50 years, and the city uses an interest rate of 7%. For $250 million, the city can build a pipeline now that would supply its needs for 50 years, or it could build the project in two stages: $150 million now and $200 million in Year 25. Annual operation and maintenance for the first stage of the two-stage project are $3.0 million through Year 25 followed by $6.0 million for the combined first and second stage project after Year 25 and through Year 50. a) Form the cash flow table for the two alternatives and the incremental investment, showing the correct signs for all entries. b) Using present worth analysis, determine the best project. c) Using annual cash flow analysis, determine the best project. d) Using the incremental rate of return analysis, determine the best project. Check at the MARR only; do not try to find the incremental ROR itself. e) Using…
The town of Podunk is considering building a new downtown parking lot. The land will cost $25,000, and the construction cost of the lot will be $150,000. Each year, costs associated with the lot will be $17,500. The income from the lot is $18,000 the first year, increasing by $3500 each year for the 12-year expected life of the lot. Determine the B/C ratio if Podunk uses a cost of money of 4%.
A state government is considering construction of a flood control dike having a life span of 15 years. History indicates that a flood occurs every five years and causes $600,000 in damages, on average. If the state uses aMARR of 12% per year and expects every public-works project to have a B–C ratio of at least 1.0, what is the maximum investment that will be allowed for the dike? Assume that the flood occurs in the middle of each five-year period. (a) $1,441,000 (b) $643,000 (c) $843,000 (d) $4,087,000 (e) $1,800,000.