Show step by step 2. A bridge connecting two towns costs$15,000,000, has an average annual operatingcost of $450,000 and a life of 50 years. Itrequires a onetime major overhaul in 25 yearsat a cost of $1,800,000. The sponsors of theproject can collect an average toll of $2.50 foreach passing vehicle. There will be also $3,000,000 annual benefits to the communities due totime savings and accident reduction fromshorter trips. The total (two-way) annual trafficrate is 1,000,000 vehicles. Determine if thispublic project is justified (i=5%).O The project is justifiedO The project is not justified

The net present value of the project that is difference between the present value of cash flow and…

Answered: rate is 1,000,000 vehicles. Determine…

rate is 1,000,000 vehicles. Determine public project is justified (i=5%). O The project is justified O The project is not justified

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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Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

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2. A bridge connecting two towns costs
$15,000,000, has an average annual operating
cost of $450,000 and a life of 50 years. It
requires a onetime major overhaul in 25 years
at a cost of $1,800,000. The sponsors of the
project can collect an average toll of $2.50 for
each passing vehicle. There will be also $3,000,
000 annual benefits to the communities due to
time savings and accident reduction from
shorter trips. The total (two-way) annual traffic
rate is 1,000,000 vehicles. Determine if this
public project is justified (i=5%).
O The project is justified
O The project is not justified

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