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 B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be

$16,100,000,

and

$334,000

per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every

fifth

year of its

30-year

projected life at a cost of

$1,340,000

per occurrence (no resurfacing cost in year

30).

Revenues generated from the toll are anticipated to be

$2,000,000

in its first year of operation, with a projected annual rate of increase of

1.75%

per year due to the anticipated annual increase in traffic across the bridge. Assuming zero market (salvage) value for the bridge at the end of

30

years and a MARR of

7%

per year, should the toll bridge be constructed? Also, assume that the initial surfacing of the bridge is included in the initial investment costs of the structure.

LOADING...

Click the icon to view the interest and annuity table for discrete compounding when the MARR is

7%

per year.

Question content area bottom

Part 1

The benefit-cost ratio of the project with PW is

enter your response here.

(Round to two decimal places.)