EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
Question
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Chapter 5, Problem 36P

(a):

To determine

Calculate the capitalized cost.

(b):

To determine

Calculate the new capitalized cost.

(c):

To determine

Calculate the capitalized cost for the different condition.

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What is the capitalized cost of a public works project that cost $25 million now and will require $2 million in maintenance annually? The effective annual interest rate is 12%.
A government has decided to build a bridge. that initial cost is estimated to be 60,000,000. the annual maintenance is estimated to be 4,000,000. every ten years a minor upgrade will be needed costing 20,000,000. every 20 years a major repair and refurbishment will be 40,000,000. If the bridge is expected to last indefinitely and effective I = 6% per year what is the capitalized cost of the bridge?
Project A requires an immediate investment of​ $8000 and another​ $6000 in three years. Net returns are​ $4000 after two​ years, ​$12,000 after four​ years, and​ $8000 after six years. Project B requires an immediate investment of​ $4000, another​ $6000 after two​ years, and​ $4000 after four years. Net returns are​ $3400 per year for seven years. Determine the net present value at​ 10%. Which project is preferable according to the net present value​ criterion?
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