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Argentina is considering the construction of a bridge across the Rio de la Plata river to connect its northern coast to the southern coast of
Argentina is considering the construction of a bridge across the "Rio de la Plata" river to connect its northern coast to the southern coast of Uruguay. If this bridge is constructed, it will reduce the travel time from Buenos Aires Argentina to Sao Paulo Brazil by over hours and has the potential to significantly improve the flow of manufactured goods between the two countries. The new bridge, which will be the longest bridge in the world and span over miles, will cost $ million. The bridge will require annual maintenance of $ million for repairs and upgrades and is estimated to last years. It is estimated that vehicles will use the bridge during the first year of operation and an additional vehicles per year until the th year. The annual traffic for the remainder of the life will be vehiclesyear These data are based on a toll charge of $ehicle. The Argentinian government requires a minimum rate of return of MARR in order to proceed with the project. a Calculate NPV IRR, and the payback period. What would you advise the Argentinian government based on the NPV and IRR of this project? Cashflow Diagram pts Calculations and answer NPV IRR, and PB pts b Would your recommendation change if Argentina could borrow up to of the cost $ million at a interest rate from the World Bank paid in annual payments over a year period Cashflow Diagram pts Calculations and answer NPV IRR, and PB pts c What other considerations exist in deciding whether to construct the bridge? No excel needed, need all calculations and cash flow diagrams handwritten. Thanks
Argentina is considering the construction of a bridge across the "Rio de la Plata" river to
connect its northern coast to the southern coast of Uruguay. If this bridge is constructed,
it will reduce the travel time from Buenos Aires Argentina to Sao Paulo Brazil by
over hours and has the potential to significantly improve the flow of manufactured
goods between the two countries. The new bridge, which will be the longest bridge in the
world and span over miles, will cost $ million. The bridge will require annual
maintenance of $ million for repairs and upgrades and is estimated to last years. It
is estimated that vehicles will use the bridge during the first year of operation
and an additional vehicles per year until the th year. The annual traffic for the
remainder of the life will be vehiclesyear These data are based on a toll
charge of $ehicle. The Argentinian government requires a minimum rate of return of
MARR in order to proceed with the project.
a Calculate NPV IRR, and the payback period. What would you advise the
Argentinian government based on the NPV and IRR of this project?
Cashflow Diagram pts
Calculations and answer NPV IRR, and PB pts
b Would your recommendation change if Argentina could borrow up to of the
cost $ million at a interest rate from the World Bank paid in annual
payments over a year period
Cashflow Diagram pts
Calculations and answer NPV IRR, and PB pts
c What other considerations exist in deciding whether to construct the bridge? No excel needed, need all calculations and cash flow diagrams handwritten. Thanks
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