4. A new toll bridge across the Hudson River is being considered to replace the Tappan Zee Bridge. Investment costs are expected to be $18M, Operating expense will be $375K per year and the bridge must be resurfaced every 5th year of its 30 year life at a cost of $1.250M. Toll revenue is expected to be $2.8M in the first year and increase by $50,000 each year due to increased traffic. Assuming zero salvage value at the end of the 30 year life and a MARR= 9%, should the bridge be constructed?
The solution provides a brief answer with some explanation. The explanation is simple and easy to understand.