5-15. The Western Railway Company (WRC) has been offered a 100-year contract to haul a fixed amount...

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5-15. The Western Railway Company (WRC) has been offered a 100-year contract to haul a fixed amount of coal each year from Wyoming to Illinois. Under the terms of the agreement, WRC will receive $4,200,000 now in exchange for its hauling services valued at $360,000 at the end of year (EOY) one, $375,000 at EOY 2 and continuing to grow by $15,000 per year through EOY 100. If WRC’s cost of capital is 12% per year, is this a profitable agreement for WRC? (5.3)

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Engineering Economy

ISBN: 9780134870069

17th Edition

Authors: William Sullivan, Elin Wicks, C Koelling

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