Population increase in northern California requires new road constructions and repairs annually from 2023. More public schools will be also needed by 2032. The state of CA is considering an option to meet the needs for more roads and schools. The option is building toll roads financed by sales tax now and building more schools in 2032 which will be financed by revenue from toll roads.

Information:

• Toll road building costs

2023: $30 million

2024: $25 million

2025: $10 million

• Annual expected number of toll road users/vehicles per day: 25,000 from 2026.
• User charge = $3.00
• Annual expected cost of new road constructions and repairs is $3 million from 2026.
• Required school investment in 2032: $100 million (in 2023 $).
• Discount rate = 3%

Provide all applicable calculations for:

1. NPV of the cost of building toll roads from 2023 to 2025
2. NPV of the annual expected revenue from toll roads from 2026 to 2032
3. NPV of the annual expected cost of new road constructions and repairs from 2026 to 2032
4. NPV of toll revenue less NPV of school investment is how much?

Will the project of building toll roads bring enough financial resource for school investment in 2032?

If not, calculate the user charge (toll charge) that will bring enough financial resources for school investment in 2032.