Question

0-7. 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 a MARR of 10% per year, should the toll

bridge be constructed ( do it in convential rules or modified rule ) And draw cash flow ?

Draw the cash flow in simple way for this question

Answer 1