Question

1) The Department Of Transportation of a Municipality is planning to construct an additional bridge to speed up evacuation in case of an emergency. Two sol utions are considered, both with a 50 years life span: Cantilever Suspension Bridge Bridge 550 600 Construction Cost 100 Land Acquisition 120 3 2.5 Annual 0&M 0.3 0.4 Annual 0&M increase 210 Major Maintenance (at 25 yrs) Decommissioning cost 190 30 25 (NOTE: all costs are in Million $) The Department uses an interest rate of 8%. Which solution should the Department choose?

Answer 1

Q1 Heu, we will us the concept of a present value of cart Annetty Fanula to evaluate which solution the department should choose. Case - W Total cost of suspension Bridge = 600 + 120 + 25 + 004 + 190 + 25 = 937.9 Case- Total cost of Cantilever Bridge = 550 +1000+ 3 +0-3+ 240 +30 = 893-3 Net Present value (cost) = where Ras Rt (It et Transaction flow / Net Cash Flow / Cost Interest rate no. of years es t= Cax- (1) NPV ( Suspension Bridge) = 937.9 : 937,9 (1+0.08 150 46.9 NPVC Suspension Breilge) 19.9 Care - cu NPV ( Cantilever Bridge) - 893.3. 893.3 11+0.08) 50 46.9 NPV (Cantilever Bridge) 19 l

So, in case - (ü) there is less net present value I cost, So Cantine lower bridge will be the better option to opt.