Project Management

The Kumasi Metropolitan Assembly is considering building a foot bridge across the Wewe River which crosses the KNUST at two key points. Two proposals are being considered for bridges at different sites. The costs of each of the proposals are summarized as follows COSTS BRIDGE A BRIDGE B Initial cost of Bridge GHC 660,000 GHC 600,000 Initial Cost of road works 70,000 GHC 60,000 Annual maintenance of bridge GHC 6,000 GHC 5,000 for first 15 years and GHC 11,000 there after GHC 5,000 GHC 2,500 Annual maintenance of roads 60 years 30 years Life of Bridge 60 years 60 ears Life of roads i. If cost of capital is 9% and making the assessment in terms of present worth which proposal 5MARKS should be adopted and why? 5MARKS ii. What will be equivalent annual cost of the bridges iii. The discounted cash flow method is hinged on the assertion of time value of money. Discuss the possible effects of a Inflation 5MARKS B. Interest 5MARKS 8. Taxation on the expected outcome of an investment project. 5MARKS