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A proposed airport terminal is expected to cost $16,000,000 with a life of 40 years. See Figure 3. The operating and maintenance costs are estimated
A proposed airport terminal is expected to cost $16,000,000 with a life of 40 years. See Figure 3. The operating and maintenance costs are estimated as follows. Operations begin at $1,000,000/year rising $50,000/year/year Maintenance begin at $500,000/year rising 10% per year Rehabilitation at the end of every 10 years $2,000,000 All costs of the terminal, including construction, will be financed at 6% and will be repaid by charging each passenger an "airport" fee. (a) Assuming 1,000,000 passengers per year for the life of the project, what fee should be charged per passenger to break even? Ignore inflation and taxes. (b) Assuming 100,000 passengers the first year of operation and an added 100,000 passengers each year thereafter, what fee should be charged per passenger to break even? Ignore inflation and taxes
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