Question

The city of Mersey is planning to construct a bridge across the Cavendashim river. The first cost of the bridge will be $6,774,476. Annual maintenance and repairs will be $26,435 for the first 5 years, and then will increase to $44,195 for each of the next 10 years. For the final 5 years, the annual maintenance and repairs will increase again to $53,649 per year. A major overhaul of $497,375 will be performed at the end of year 8. Using an interest rate of 4%, what is the equivalent uniform annual cost for the 20-year period? Hint: Since this is an equivalent uniform annual cost, do you need to indicate that as negative? See example 6-3 and 6-4 in the book. Enter your answer as 1234 Round your answer. Do not use a dollar sign ("$"), any commas (";"), or a decimal point("").

Answer 1

Net Present cost of the bridge = 6774476 + 26435 * (P/A, 4%,5) + 44195 * (P/A, 4%,10)*(P/F, 4%,5) + 53649 * (P/A, 4%,5)*(P/F, 4%,15) + 497375 * (P/F, 4%,8)

= 6774476 + 26435 *4.451822 + 44195 *8.110896*0.821927 + 53649 *4.451822*0.555265 + 497375 *0.730690

= 7682832.83 ~ 7682833 (Nearest Dollar)