Expenses over an infinite planning horizon

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Reference no: EM131450338

A state highway department is planning the construction of a toll road. Construction cost will be $200M (at period=year 0). Annual maintenance is estimated to be $1M every year and forever. In addition, every 10 years in perpetuity (=forever), a major resurfacing will have to be carried out at a cost of $10M. It is estimated that 6M cars and 600K trucks will use the road each year and it is decided that the toll charged to a truck will be four times that of a car. MARR is 10%. Determine what minimum toll should be charged to each car and truck to cover all expenses over an infinite planning horizon. The toll is constant and will not vary year to year.

Reference no: EM131450338

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