Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Chapter 13, Problem 4RQE
To determine
Calculate the effective interest rate using the architect’s estimate cost.
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1. A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1-10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?
2. 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 $17,500,000 and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge…
Determine which is the better alternative, assuming using straight-line depreciation method, an income tax rate of 40% and an after-tax MARR of 10%. Show complete solution
A contractor wishes to participate in the bidding for a government project and submitted documents for eligibility screening or pre-qualification. The ABC for the project to be bid is P328,644,200.20 with a duration of 20 months. The document submitted by the contractor showed that the largest single project similar to the project to be bid undertaken by the contractor in the last 3-years has a value of P163,866,528.45. Will the contractor be qualified to participate in the bidding for the project? Why?
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Construction Management
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