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Five years from now, the Peoria Turnpike Authority will have to spend $25 million to upgrade...

Five years from now, the Peoria Turnpike Authority will have to spend $25 million to upgrade all of its E-ZPass® toll booths. If 15 million vehicles per year use the turnpike, how much additional toll must they charge per vehicle over the next 5 years to have enough money for the upgrade? Assume an interest rate of 6% per year. You must draw a correct cash flow diagram

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Answer #1

1. Annual charge per vehicle = Total cash to be collected per Annum / # Vehicles = 4434910.01 / 15000000 = $0.2955

The company has to charge $0.30 per vehicle to achieve the goal of $25 million in 5 years

*Please comment if you face any difficulty and please don't forget to provide positive rating*

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