The Rustin Transportation Planning Board calculates the cost of upgrading a four-mile section of four-lane highway from the public use to toll road to be $41 million now. Resurfacing and the other maintenance will cost $820,000 every four years. A toll road would require four toll-takers be on duty 24 hours a day. Toll-takers are paid $11.14 per hour. The Board uses an interest rate of 5% per year for its long term planning.
1. Analyze the capitalized cost of this project?
2. Determine the annualized cost of this project?
3. A traffic study has shown that approximately 18,000 cars will pass through the toll gates each day. Discuss how much should the toll per car be in order for this project to be self-supporting?