8. A new 2-lane STREET is needed in a part of town that is growing. At some poin
ID: 1090956 • Letter: 8
Question
8. A new 2-lane STREET is needed in a part of town that is growing. At some point the road will need 4 lanes to handle anticipated traffic. If the citys optimistic estimate of growth is used, the expansion will be needed in 4 years. For the most likely and pessimistic estimates, the expansion will be needed in 8 and 15 years, respectively. The expansion will cost $4.2 million. Use interest rate of 8%.
a. What is the PW for each scenario, and what is the range of values?
b. Find the mean value of the expansions.
SHOW STEP BY STEP AND ALL FORMULAS
DONOT USE EXCELL
Explanation / Answer
interest rate = 8%
time for optimistic estimate = 4 years
time of mostlikely estimate = 8 years
time for pessimistic estimate = 15 years
Present worth is Optimistic estimate = 4.2/1.08^4 = $3.0871253 million
Present worth of most likely estimate = 4.2/1.08^8 = $2.269129 million
Present worth of pessimistic estimate = 4.2/1.08^15 = $1.32401516 million
mean value = (3.0871253+2.269129+1.32401516)/3 = $2.22675 million
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.