Question
Your client, a turnpike authority, is considering the feasibility of a 100-mile extension to the present turnpike at a cost of $2,000,000 per mile. The
Your client, a turnpike authority, is considering the feasibility of a 100-mile extension to the present turnpike at a cost of $2,000,000 per mile. The traffic is estimated to average 25,000 cars per day (365 days per year) for the first year. Each year thereafter the traffic is expected to increase by an additional 2,500 cars per day for the full 20-year life of the project. (use n=20). The money to build the road can be borrowed at 7 percent per year. Sixty percent of the toll receipts will be needed to pay operating and maintenance costs and the remaining 40 percent will be available to pay off the loan. The authority asks you to determine how much toll must be charged each car in terms of dollars per mile in order to pay O & M costs as well as retire the bonds. (Suggestion: Only use costs and revenues for one mile so that you have smaller numbers).
Do not solve using formulas or excel. Use only factors such as f/p, p/f, a/f, a/p, f/a, p/a, a/g, and p/g
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