The cost of building a new bridge is estimated at AUD 400 million. This toll bridge will operate for 70 years and will generate an income of AUD 14 million at the end of each year. The discount rate is 3%.

1. What is the NPV of the project? Should you invest in the project? (3pts)

2. For safety reasons, the engineer forecasts that the bridge should undergo a complete renovation in the 35^th year of use. The cost of the renovation will amount to AUD 40 million. Does your decision remain similar? Show your calculation. (2pts)

3. Assume there are no costs of renovation. Calculate the payback period of the project. If your pre-specified length of time is 30 years, should you accept the project? (2pt)