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1. (10 pts) The city of Seattle is considering adding new buses for its current masstransit system. The total investment package is $1 billion and

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1. (10 pts) The city of Seattle is considering adding new buses for its current masstransit system. The total investment package is $1 billion and expected to last 10 years with a salvage value of $1 million. The annual operating and maintenance (0&M) costs for buses would be $5 million during the rst year and will grow by 5% each year over the previous year's 0&M costs If the system expects 100 million passenger-trips per year, what would be the fair price to charge per passenger- trip? Assume the city uses 8% interest rate for any city- sponsored project

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