Argentina is considering construction a bridge across the Rio de la Plata to connect its northern coast to the southern coast or Uruguay. If this bridge is constructed, it will reduce travel time from Buenos Aires, Argentina, to Sao Paulo, Brazil, by over 10 hours, and there is the potential to significantly improve the flow of manufactured goods between the two countries. The cost the new bridge, which will be the lonest bridge in the world, spanning over 50 miles, will be $700 million. The bridge will require an annual maintenance budget of $10 million for repairs and upgrades and is expected to last 80 years. It is estimated that 550,000 vehicles will use the bridge during the first year of operation, and an additional 50,000 vehicles per year until the 10th year. These data are based on a tool charge of $90 per vehicle. The annual traffic for the reminder of the life of the bridge will be 1,000,000 vehicles per year. The Argentine government requires a minimum rate of return of 9% to proceed with the project.

(a) Does this provide make sense from an economics standpoint?

(b) What are some of the uncertainties associated with your answer to part (a)?

(c) What considerations are there (both economic and non-economic factors) in deciding whether to construct the bridge?