Calculate the user charge that will bring

Reference no: EM133650141

Question: Population increase in northern California requires new road constructions and repairs annually from 2023. More public schools will be also needed by 2032. The state of CA is considering an option to meet the needs for more roads and schools. The option is building toll roads financed by sales tax now and building more schools in 2032 which will be financed by revenue from toll roads.

Information:

Toll road building costs
2023: $30 million

2024: $25 million

2025: $10 million

Annual expected number of toll road users/vehicles per day: 25,000 from 2026.
User charge = $3.00
Annual expected cost of new road constructions and repairs is $3 million from 2026.
Required school investment in 2032: $100 million (in 2023 $).
Discount rate = 3%

Will the project of building toll roads bring enough financial resource for school investment in 2032?

If not, calculate the user charge (toll charge) that will bring enough financial resources for school investment in 2032.

Reference no: EM133650141

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