Question

5. A new bridge across the Allegheny River in Pittsburgh is expected to be permanent and will have an initial cost of $30 million. This bridge must be resurfaced every 5 years at a cost of $1 million. The annual inspection and operating costs are estimated to be $50,000. Determine its equivalent annual worth at an interest rate of 10% per year.

please solve using factors

Answer 1

A New bridge across the Allegheny River in Pittsburgh is expected to be permanent and will have an initial cost of $ 30 million.

Initial cost = $ 30

The bridge must be resurfaced every 5 year at a cost of $ 1 million.

The annual inspection and operating cost = $ 50,000.

To calculate : The equivalent annual worked at an interest rate of 10% per year.

Now,

Rate of interest, r = 10% = 0.1

Therefore the equivalent annual work at an interest rate of 10% per year is $ 3,250,000.

pv oz $ 1 - 1000000 - 1000000 1000000 - 1000000 = million rx 5 0.1 x 5 every syr - - 1000000 0.5 = $ 2,000,000 pu of annual inspection and operating cost = 50000 = $ 500,000. 0,1 now Total pv = $(30,000,000+2,000,000+500,000) $ 32,500,000 cale have Total pu= equivalent annual worth P Rate i equivalent annual worth = rade x Total pu = 0.1 X $ 32,500,000 = 1$ 3,250,000