10-7. A toll bridge across the Mississippi River is being considered as a replacement for the current I-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the BC ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,500,000, and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fth year of its 30-year projected life at a cost of $1,250,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,500,000 in its rst year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in trafc across the bridge. Assuming zero market (salvage) value for the bridge at the end of 30 years and a MARR of 10% per year, should the toll bridge be constructed?

solve by use this formula :

draw cashflow

= Conventional B-C ratio with PW B-C PW(benefits of the proposed project) PW(total costs of the proposed project) PW(B) I - PWMV) + PW (O&M) operation mintan MV=Market value, O&M=Operation and maintenance 1