Should the toll bridge be constructed


A toll bridge across the Mississippi River is being considered as a replacement for current I-40 bridge linking Tennessee to Arkansas.  Because this bridge, if approved, will become a part of U.S. Interstate Highway system, B-C ratio method must be applied in valuation.  The investment costs of the structure are calculated to be $17,000,000 and the $325,000 per year in operating and the maintenance costs are anticipated.  In addition, the bridge must be resurfaced every fifth year of its 30-year projected lie at a cost of $1, 250, 00 per occurrence. The revenues generated from the roll are predictable to be $2,500,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in the traffic across the bridge.  Assuming the zero market value for bridge at the end of 30 years and the MARR 10% per year, should the toll bridge be constructed?

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Macroeconomics: Should the toll bridge be constructed
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