Determine the present value of the life-cycle cost

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If the cost of building a new road is $2,500,000 per linear-mile, and the expected annual maintenance cost is $350,000 per linear-mile for 20 years of service-life. At the end of its service-life, the road will be demolish at a cost of $750,000 per linear-mile; and the salvage value is expected to be $50,000 per linear-mile.

Assuming a discount rate of 4.00 percent, determine the present value of the life-cycle cost of a proposed five-mile long roadway. Clearly show all calculations to receive credit.

Reference no: EM131112614

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