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5. Suppose that you are the governor of Istanbul and trying to decide whether you should support the third Bosporus Bridge construction project. The project
5. Suppose that you are the governor of Istanbul and trying to decide whether you should support the third Bosporus Bridge construction project. The project is estimated to take 5 years to complete. The project will require $50 million in construction materials per year and $20 million in labor costs per year. In addition, the project will disrupt transportation within the city for the duration of the construction. The transportation disruption lengthens transport times for 1 million workers by 20 hours a year. The project, when finished, will ease transportation within the city. Each of the 1 million workers will have their transport time reduced by 60 hours a year as compared to the pre-construction transport time for 10 years. Assume that all workers are paid $10 per hour (in other words, one hour of a worker lost/gained is worth $10), the discount rate is 5% and the benefits of the project is accrued between years 6 and 15. (a) (10 points) Show the yearly benefits and costs of this project on a table. (b) (10 points) Calculate the present value of the net benefits of this project
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