Compute benefit cost ratio

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Question - A 65 km urban highway is planned to be constructed to connect a Kajang to Port Klang. Estimated cost is RM 2,000 million and the construction period is planned to be 2 years. The highway project will be privatised and the concession period is 10 years.

The concession company will finance RM 200 million of the total cost using its own source and the balance will be financed by a local bank. Financing period is 10 years and yearly repayment is RM 300 million for 8 years after the construction period.

Maintenance cost is estimated to be RM 50 million a year and expected to be increasing at 7% per annum. Toll collection is estimated to be RM 390 million a year and increasing at 9% per annum.

Required -

(a) Compute NPV cost and NPV income for the concession period. Use 8% discount rate.

(b) Compute Benefit Cost Ratio.

(c) Prepare computation table as in (a) with 42% discount rate or cost stream table.

(d) Compute Internal Rate of Return (IRR).

Reference no: EM133085971

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