ENG106W12_HW5-assignment

# ENG106W12_HW5-assignment - ENG 106 Due Wed Feb 15 3 pm HW...

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ENG 106 Homework #5 Assignment Winter 2012 Due: Wed, Feb 15, 3 pm, HW box Note: Unless otherwise stated, cash flows are in actual dollars and i and MARR are market rates. 5.28a&c: A newly constructed bridge costs \$10,000,000. The same bridge is estimated to need renovation every 10 years at a cost of \$1,000,000. Annual repairs and maintenance are estimated to be \$100,000 per year. a) If the interest rate is 5%, determine the capitalized equivalent cost of the bridge. c) Repeat the analysis with an interest rate of 10%. 5.39 Consider the following two mutually exclusive investment projects: A B n Cash Flow Salvage Value Cash Flow Salvage Value 0 -\$12,000 -\$10,000 1 -\$2,000 \$6,000 -\$2,100 \$6000 2 -\$2,000 \$4,000 -\$2,100 \$3,000 3 -\$2,000 \$3,000 -\$2,100 \$1,000 4 -\$2,000 \$2,000 5 -\$2,000 \$2,000 Salvage values represent the net proceeds (after tax) from disposal of the assets if they are sold at the end of year listed. Both projects will be available (and can be repeated) with the same costs and salvage values for an indefinite period. Assume constant dollars and inflation free interest rates.

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