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use this to solve the question Case 4: A city is considering extending the runways of its municipal airport so that commercial jets can use
use this to solve the question
Case 4: A city is considering extending the runways of its municipal airport so that commercial jets can use the facilities. The land necessary for the runway extension is currently a farmland that can be purchased for BD350,000. Construction cost for the runway extension are projected to be BD600,000 and the additional annual maintenance costs for the extension are estimated to be BD22,500. If the runways are extended, a small terminal will be constructed at a cost of BD250,000. The annual operation and maintenance cost for the terminal are estimated at BD75,000. Finally, the projected increase in flight will require he addition of two air traffic controllers at an annual cost of BD100,000. solve the following and present the solution in structured manner a. Payback period b. Profitability index c. Internal Rate of Return d. Break-even Analysis (if applicable) e. Depreciation schedules (use one method only) f. PW, AW, or FW Analysis (use one method only) Note: use tables to solve the question Given data, The study period = 20 years Interest rate = 10% Onetime costs = 600000+ 350000 + 250000 = 1200000 Additional cost per year = 22500 + 75000 + 100000 = 197500 Additional Revenue = 325000 + 65000 + 50000 + 50000 = 490000 Net revenue per year = 490000 - 197500 = 292500. NPV = -1200000 + 292500/1.1 +292500/1.1^2 +. .+ 292500/1. 1420 = 1290217 Given there is sure net income, the runway ought to be extendedStep by Step Solution
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