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Maintenance costs on a bridge are $5,000 every third year starting at the end of year 3. For analysis purposes, the bridge is assumed to have an infinite life. What is the capitalized equivalent (CE) cost of these infinite payments, assuming an annual interest rate of 9% compounded annually?

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

1. The first cost of a bridge that is expected to have an infinite life is $10 million. The maintenance cost of the bridge will be $150,000 per year. At an interest rate of 10% per year, the annual worth of the bridge is equal to:

a. $3,200,000

b. $1,000,000

c. $1,150,000

d. $850,000

2. When calculating the i* value, all the net positive cash flow are assumed to be reinvested at:

a. The current market interest rate

b. The i* rate

c. The company's MARR

d. The company's cost of capital

3. If you have the present worth of an alternative with a 5-year life, you can obtain its annual worth by:

a. Multiplying the PW by i

b. Multiplying the PW by (A/F, i, 5)

c. Multiplying the PW by (P/A, i, 5)

d. Multiplying the PW by (A/P, i, 5)

4. If you have the capitalized cost of an alternative that has an infinite life, you can get its annual cost over a very long number of years by:

a. Multiplying the capitalized cost by i

b. Multiplying the capitalized cost by (A/F,i, n)

c. Dividing the capitalized cost by (P/A, i,n)

d. Dividing the capitalized cost by i

5. An investment of $85,000 resulted in uniforms income of $15,000 per year for 15 years. The rate of return of the investment is equal to:

a. 10.6%

b. 15.6%

c. 13.7%

d. 23.5%

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 be $6,500,000. Annual maintenance and repairs will cost $25,000 for each of the first five years, increase to $30,000 for each of the next ten years, and increase again 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 cost for a 20-year period.

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 cost for a 20-year period.

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