A 1000ft (one lane) asphalt road costs P3.8M. It requires no upkeep until the end of 3 years when P80,000 will be needed for repairs. After this P90,000 will be needed for repairs at the end of each year for the next 4 years, then P120,000 thereafter. Rework cost of 1.5M is expected every 6 years. If money is worth 11% compounded annually, what was would be the equivalent uniform annual cost for a 20-year period.

A 1000ft (one lane) asphalt road costs P3.8M. It requires no upkeep until the end of 3 years when P80,000 will be needed for repairs. After this P90,000 will be needed for repairs at the end of each year for the next 4 years, then P120,000 thereafter. Rework cost of 1.5M is expected every 6 years. If money is worth 11% compounded annually, what was would be the equivalent uniform annual cost for a 20-year period.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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