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%?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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 proposed bridge on the interstate highway is being considered at the cost of 4 million dollars. It is expected that the bridge will have a life of 30 years. Construction costs will be paid by government agencies. Operation and maintenance costs are estimated to be $250,000 per year. Benefits to the public are estimated to be $900,000 per year. The building of the bridge will result in an estimated cost of $250,000 per year to the general public. The project requires a return of 5%. Determine the benefit/cost (B/C) ratio.
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?
A new highway is to be constructed. Design A calls for a concrete pavement costing P3600 per foot with a 20-year life; two paved ditches costing P120 per foot each; and three box culverts every mile, each costing P360,000 and having a 20-year life. Annual maintenance will cost P72,000 per mile; the culverts must be cleaned every five years at a cost of P18,000 each per mile. Design B calls for a bituminous pavement costing P1800 per foot with a 10-year life; two sodded ditches costing P60 per foot each; and three pipe culverts every mile, each costing P90,000 and having a 10-year life. The replacement culverts will cost P96,000 each. Annual maintenance will cost P108,000 per mile; the culverts must be cleaned yearly at a cost of P9000 each per mile; and the annual ditch maintenance will cost P60 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 1/1 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% pe.…
A city wants to set aside enough money to build, operate, and renovate a sewage treatment plant in perpetuity. An engineering company estimates that the plant will cost an immediate $20 million to build and will require $5 million every 20 years to replace major equipment and $10 million every 50 years to pay for the major structural renovation. It is estimated that operation and maintenance costs will be $1.5 million every year. What amount will the city need to set aside? Interest earned on the annuity is 7%.
A new highway is to be constructed. Design A calls for a concrete pavement costing 3600 per foot with a 20-year life, two paved ditches costing 120 per foot each and three box culverts every mile, each costing 360,000 and having a 20-year life. Annual maintenance will cost 72,000 per mile, the culverts must be cleaned every five years at a cost of 18,000 each per mile. Design B calls for a bituminous pavement costing 1800 per foot with a 10-year life, two sodded ditches costing 60 per foot each, and three pipe culverts every mile, each costing 90,000 and having a 10-year life. The replacement culverts will cost 96,000 each. Annual maintenance will cost 108,000 per mile, the culverts must be cleaned yearly at a cost of 9000 each per mile, and the annual ditch maintenance will cost 60 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of Annual Worth and Present Worth if the Minimum…
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 new highway is to be constructed. Design A calls for a concrete pavement costing $90 per foot with a 20-year life; two paved ditches costing $3 per foot each; and three box culverts every mile, each costing $9,000 and having a 20-year life. Annual maintenance will cost $1,800 per mile; the culverts must be cleaned every five years at a cost of $450 each per mile. Design B calls for a bituminous pavement costing $45 per foot with a 10-year life; two sodded ditches costing $1.50 per foot each; and three pipe culverts every mile, each costing $2,250 and having a 10-year life. The replacement culverts will cost $2,400 each. Annual maintenance will cost $2,700 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.50 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% per year.
A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 20 years. Annual maintenance costs for the new bridge are estimated to be $24,000. People will be charged a toll of $0.25 per car to use the new bridge. Annual car traffic is estimated at 400,000 cars. The cost of collecting the toll consists of annual salaries for five collectors at $10,000 per collector. The existing bridge can be refurbished for $1,600,000 and would need to be replaced in 20 years. There would be additional refurbishing costs of $70,000 every five years and regular annual maintenance costs of $20,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 12% per year, what is the maximum acceptable cost (X) of the new bridge? (11.2)(a) $1,943,594 (b) $2,018,641 (c) $1,652,425 (d) $1,570,122 (e) $2,156,209
A community is looking to build a dam over a stretch of river that is currently being used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years after which its reservoir will be full of sediment and the dam will need to be removed. The following are the characteristics of the dam:Initial cost: $350,000,000Electricity produced: 200,000 MWh per year at $150/MWh Value of recreation lost: $20,000,000 per yea An electricity company is deciding whether or not to invest in electricity generation in the community. They expect the new power plant to have a lifetime of 15 years. Investment expenditures in each year is $9500, while operations and maintenance expenditures are $12,500. Fuel expenditures in each year are $50,000, and the plant is expected to generate 3500 kwh of electricity in each year. If the company’s discount rate is 5% and the price at which they expect to sell the electricity is $30,000 over that period, is the power plant a…
A community is looking to build a dam over a stretch of river that is currently being used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years after which its reservoir will be full of sediment and the dam will need to be removed. The following are the characteristics of the dam:Initial cost: $350,000,000Electricity produced: 200,000 MWh per year at $150/MWh Value of recreation lost: $20,000,000 per year a. If the social discount rate is a constant 2% per year, is the dam a good idea? Show your work and explain your rationale.
A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $24,000. People will be charged a toll of $0.29 per car to use the new bridge. Annual car traffic is estimated at 390,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $10,000 per collector. The existing bridge can be refurbished for $1,300,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $75,000 every five years and regular annual maintenance costs of $22,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 12% per year, what is the maximum acceptable cost (X) of the new bridge?

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