A transportation engineer received a request to install dynamic traffic signals

Question

A transportation engineer received a request to install dynamic traffic signals to replace static vehicle control devices at an intersection. The engineer must prepare an estimate of an operating budget for a ten-year period, if the signals were installed. The initial cost of the signals is $35,000 and the installation costs are $12,000. The estimated energy cost to operate the signals for the first year is $1,000. The energy cost is expected to increase uniformly each year by $15 of the first year's energy cost. Assume an interest rate of 8%. What is the EUAC for the operating budget? Salvage value at the end of the ten-year period is negligible.

Explanation / Answer

PW for the operating budget = 35000+ 12000+1000/(1.08) +(1000+15)/(1.08)^2+----+(1000+15*9)/(1.08)^10

=$54,099.73

so PW =$54,099.73

EUAC =54,099.73(A/P,8%,5)

or it can be find in EXCEL by =PMT(0.08,5,54099.73,0)

from this we get EUAC =$13,549.63

ans:$13,549.63

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