Atoll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge if approved, will become a part of the USInterstate Highway system, the B-C ratio method must be applied in the evaluation Investment costs of the structure are estimated to be $17,000,000, and $317.000 per year in operating andmaintenance costs are anticipated. In addition, the bridge must be resurfaced every fith year of its 25-year projected life at a $1,130.000 per occumence (ho resurfacing cost in year 25) Revenuesgenerated from the toll are anticipated to be $2,200,000 in its first year of operation, with a projected annual rate of increase o 1.75% per year due to the anticipated annual increase in traffe across thebridge. Assuming zero market (salvage) value for the bridge at the end of 25 years and a MARR of 8% per year, should the tall bridge be constructed? Alse, assume that the vial eurtacing of the bridgeis included in the initial investment costs of the structure.Click the iconview the interest and annuty table for discrete compounding when the MARR is 8% per yearThe beneft-cost ratio of the project with PW is (Round to two decimal places)

The objective of the question is to determine whether the Atoll bridge should be constructed based…

Answered: Atoll bridge across the Mississippi…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $19,000,000, and $332,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projected life at a cost of $1,300,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,400,000 in its first year of operation, with a projected annual rate of increase of 2% per year due to the anticipated annual increase in traffic across the bridge. Assuming zero market (salvage) value for the bridge at the end of 30 years and a MARR of 12% per year, should the toll bridge be constructed? Also, assume that the initial surfacing of…
A toll bridge across the Mississippi River is being considered as a replacement for the current I-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,700,000, and $331,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every sixth year of its 30-year projected life at a cost of $1,120,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,600,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the bridge. Assuming zero market (salvage) value for the bridge at the end of 30 years and a MARR of 7% per year, should the toll bridge be constructed? Also, assume that the initial surfacing of…
A toll bridge across the Mississippi River is being considered as a replacement for the current I-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B–C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,500,000, and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projected life at a cost of $1,250,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,500,000 in its first year of operation, with a projected annual rate of increase of 2.25 % per year due to the anticipated annual increase in traffic across the bridge. Assuming zero market (salvage) value for the bridge at the end of 30 years and aMARR of 10% per year, should the toll bridge be constructed ?
Two sites are currently under consideration for a bridge over a small river. The north site requires a suspension bridge. The south site has a much shorter span, allowing for a truss bridge, but it would require new road construction.The suspension bridge will cost $500 million with annual inspection andmaintenance costs of $350,000. In addition, the concrete deck would have to be resurfaced every 10 years at a cost of $1,000,000. The truss bridge and approach roads are expected to cost $250 million and have annual maintenance costs of $200,000. This bridge would have to be painted every 3 years at a cost of $400,000. In addition, the bridge would have to be sandblasted every 10 years at a cost of $1,900,000. The cost of purchasing right-of-way is expected to be $20 million for the suspension bridge and $150 million for the truss bridge. Compare the alternatives on the basis of their capitalized cost if the interest rate is 6% per year.
A bridge is to be constructed now as part of a new road. Engineers have determined that traffic density on the new road will justify a two-lane road and a bridge at the present time. Because of uncertainty regarding futureuse of the road, the time at which an extra two lanes will be required is currently being studied. The two-lane bridge will cost $200,000 and the fourlane bridge, if built initially, will cost $350,000. The future cost of widening a two-lane bridge to four lanes will be an extra $200,000 plus $25,000 for every year that widening is delayed. The MARR used by the highway department is 12% per year. The following estimates have been made of the times at which the four-lane bridge will be required: In view of these estimates, what would you recommend? What difficulty, if any, do you have in interpreting your results? List some advantages and disadvantages of this method of preparing estimates.
The Arkansas Department of Transportation may build a new highway between Texarkana and Fort Smith, currently a distance of 181 miles. Design 1 is a four-lane highway built entirely on the existing route. Design 2 includes a significant rerouting through a mountainous region that would reduce the mileage to 166 miles. Design 3 is a fully access-controlled interstate-quality highway with more rerouting, which would reduce the total mileage to 148 miles.Benefits for this project depend on mileage saved times the number of vehicles, plus the estimated value for the larger number of trips that will occur with the shorter and faster routes. The estimated benefits and costs of the three potential designs are shown in the table. Doing nothing yields no costs and no benefits. Using incremental analysis for the B/C ratio, a planning horizon of 75 years, and a MARR of 6%, which design would you recommend?
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd…
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.a. The interchange is projected to cost $50 million. It will need to begin construction in 18 months. Rights-of-way acquisition, surveying, and permitting have already been completed and paid for by the program. There will be 2 additional project phases: 1) planning & design, 2) construction. Each will require payment at the end of the phase. The projected cost of the 1st phase of the project is $2.5 million. The 1st phase is expected to need the entire 18 months prior to the start of construction and must be completed before construction can begin. The 2nd…
A bridge design firm is performing an economic analysis of two mutually exclusive designs forahighway overpass. The steel girder option has an initial cost of $2.13 million, and the concreteoption has an initial cost of $2.41 million. Every 25 years, the steel bridge must be painted at a costof $610,000, and all other maintenance costs are the same for both options. The steel bridge isexpected to last 50 years, and concrete bridge is expected to last 75 years. Both are assumed to beidentically replaced indefinitely. Based on the shortest acceptable analysis period for each option,determine the equivalent uniform annual cost (EUAC) for the best option using an interest rate of8%. Express your answer in $ to the nearest $1,000.
A project is being considered by the Tennessee Department of Transportation to replace an aging bridge across the Cumberland River on a state highway. The existing two-lane bridge is expensive to maintain and creates a traffic bottleneck because the state highway is four lanes wide on either side of the bridge. The new bridge can be constructed at a cost of $300,000, and estimated annual maintenance costs are $10,000. The existing bridge has annual maintenance costs of $18,500. The annual benefit of the new four-lane bridge to motorists, due to the removal of the traffic bottleneck, has been estimated to be $25,000. Conduct a B-C analysis, using a MARR of 8% and a study period of 25 years, to determine whether the new bridge should be constructed.
A project is being considered by the Tennessee Department of Transportation to replace an aging bridge across the Cumberland River on a state highway. The existing two-lane bridge is expensive to maintain and creates a traffic bottleneck because the state highway is four lanes wide on either side of the bridge. The new bridge can be constructed at a cost of $300,000, and estimated annual maintenance costs are $10,000. The existing bridge has annual maintenance costs of $18,500. The annual benefit of the new four-lane bridge to motorists, due to the removal ofthe traffic bottleneck, has been estimated to be $25,000. Conduct a B–C analysis, using aMARR of 8% and a study period of 25 years, to determine whether the new bridge should be constructed.
The city of Zamboanga contemplates to increase the capacity of their existing water transmission lines. Two plans are under considerations. Plan A requires the construction of a parallel pipeline, the flow being maintained by gravity. The initial costs is P2, 750, 000.00 and the life is 40 years, with an annual operating cost of P5, 000.00. Plan B requires the construction of a booster pumping stations coating P1, 050, 000.00 with the life of 40 years. The pumping equipment cost an additional amount of P250, 000.00, it has a life of 20 years and a salvage value of P25, 000. The annual operating costs is P165, 000.00. Which is the most economical plan if the interest rate is 12% and how much is the difference between the two plans. Use present worth method.

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