Determine the present value of the life- cycle cost

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Question: 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: EM131962857

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