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Question 1 As a Client's representative for road construction project, you have been assigned the task of evaluating the financial viability of two alternative road
Question 1 As a Client's representative for road construction project, you have been assigned the task of evaluating the financial viability of two alternative road improvement projects. Project data are captured in Table 1.1 Table 1.1: Municipal Road improvement project Alternative A Alternative B Initial cost R 11 000 000 12 000 000 Annual maintenance 240 000 for the first 18 R258 000 for the first costs, R years then 320 000 30 years and R300 000 over the remaining 12 over the remaining 10 years years Annual Energy Costs, 150 000 100 000 R Annual Revenue, R 320 000 400 000 Salvage Value, R 900 000 1000 000 Economic Life, years 30 40 Discount rate p.a. 10.5% 10.5% Using Net Present Value analysis, determine which of the project alternatives is worth implementation. (Hint: F=P(1+i)"; P= A[(1+i)" 1]/[i*(1+i)=))
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