Problem 4 (7 pt BONUS) The initial cost of building a new bridge is $8 bridge wi

Question

Problem 4 (7 pt BONUS) The initial cost of building a new bridge is $8 bridge will need to undergo repainting every 9 years, cost of each S417,000. If are no other major expenses, how much should they set aside now in an account earning 7% interest? illion. It is estimated at the time of construction that the as well as roadway resurfacing every 11 years. The repainting is assumed to be $159,000, and the cost of each resurfacing is assumed to be the local government plans to fund the upkeep of this bridge indefinitely, and assuming there

Explanation / Answer

AW of repainting done every 9 years = 159000*0.07/(1.07^9-1)= $        13,274.35 AW of resurfacing done every 11 years = 417000*0.07/(1.07^11-1) = $        26,419.83 Annualized cost of maintenance $        39,694.18 Fund to setup for the indefinite upkeep = 39694.18/0.07 = $      567,059.69 Answer

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