A new 2-lane road is needed in a part of town that is growing. At some point the road will need 4 lanes to handle the anticipated traffic. If the city's optimistic estimate of growth is used, the expansion will be needed in 3 years. For the most likely and pessimistic estimates, the expansion will be needed in 6 and 10 years, respectively. The expansion will cost $4.9 million. Use an interest rate of 7%. (a) What is the PW for each scenario, and what is the range of values?

If $1000 is invested annually at 6% continuous compounding for each of 10 years, how much is in the account after the last deposit? (a) $1822 (b) S10,000 (c) $13,181 (d) $13,295

A project is being considered that has a first cost of $12,500, creates $5000 in annual cost savings, requires $3000 in annual operating costs, and has a salvage value of $2000 after a project life of 3 years. If interest is 10% per year, which formula calculates the project's present worth? (a) PW = 12,500(P/F, 10%, 1) + (-5000+3000) (P/A, 10%, 3) (b) PW = -12,500+ (5000-3000) (P/A, 10%,3 (d) PW = -12, 500+ - 2000 (F/P, 10%, 3) ) - 2000(P/F, 10%, 3) (c) PW = 12,500 (F/P, 10%, 3) + (5000-3000) (F/A, 10%, 3) +2000 5000 (P/A, 10 %, 3) - 3000 (P/A, 10 %, 3) + 2000 (P/F, 10%, 3)

What is the equivalent annuity starting in year 1 and ending in year 5 for the following project (assume i = 7%) n (year) Cash flow ($) 10 10 1 -1000 2 -600 3 -500 4 10 15 -100 A) 471.0 B) 474.1 C) 472.7 D) 474.7

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