A road wilt need to be widened in the future at a cost of


A road wilt need to be widened in the future at a cost of $4.2 million to accommodate the anticipated traffic growth. The widening will be needed in 4 years if the city's optimistic growth estimate is used. The most likely and pessimistic estimates push the widening need to year 8 and year 15 respectively. The town uses an i=8%, the optimistic estimate has a probability of 20% and the pessimistic 40%.

a) What is the PW of each scenario?

b) What is the mean value of the PWs?

c) What is the expected number of years until the widening is needed?

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Financial Management: A road wilt need to be widened in the future at a cost of
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