Lubbock County is planning to construct a bridge across the Rio de Lubbock to fa
ID: 1092034 • Letter: L
Question
Lubbock County is planning to construct a bridge across the Rio de Lubbock to facilitate afternoon skiing in the El Dusto Ski Basin. The first cost for the bridge will amount to $6,500,000. Annual maintenance and repairs will amount to $25,000 for each of the first five years, to $30,000 for each of the next ten years and to $35,000 for each of the next five years. In addition, a major overhaul costing $500,000 will be required at the end of the tenth year. Use an interest rate of 5% and determine the equivalent uniform annual worth for a 20-year period.
Explanation / Answer
Cash Outflows Purchase - 1.00 6,500,000.00 6,500,000.00 Cash Outflows 1.00 0.95 25,000.00 23,809.52 Cash Outflows 2.00 0.91 25,000.00 22,675.74 Cash Outflows 3.00 0.86 25,000.00 21,595.94 Cash Outflows 4.00 0.82 25,000.00 20,567.56 Cash Outflows 5.00 0.78 25,000.00 19,588.15 Cash Outflows 6.00 0.75 30,000.00 22,386.46 Cash Outflows 7.00 0.71 30,000.00 21,320.44 Cash Outflows 8.00 0.68 30,000.00 20,305.18 Cash Outflows 9.00 0.64 30,000.00 19,338.27 Cash Outflows 10.00 0.61 30,000.00 18,417.40 Cash Outflows 11.00 0.58 30,000.00 17,540.38 Cash Outflows 12.00 0.56 30,000.00 16,705.12 Cash Outflows 13.00 0.53 30,000.00 15,909.64 Cash Outflows 14.00 0.51 30,000.00 15,152.04 Cash Outflows 15.00 0.48 30,000.00 14,430.51 Cash Outflows 16.00 0.46 35,000.00 16,033.90 Cash Outflows 17.00 0.44 35,000.00 15,270.38 Cash Outflows 18.00 0.42 35,000.00 14,543.22 Cash Outflows 19.00 0.40 35,000.00 13,850.69 Cash Outflows 20.00 0.38 35,000.00 13,191.13 Cash OutflowsMajor Overhaul 10.00 0.61 500,000.00 306,956.63 PV of cash outflows 7,169,588.32 Equivalent uniform annual cost 358,479.42
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