Interest rate and a study period

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Reference no: EM131807368

Fishermen's Bay used to have a thriving fishing industry, but the boats got bigger and now few fit in the harbor's protected area. The city council would like to attract the boats back, and it believes a new breakwater and docking area would do the job. The city engineer's estimated first cost is $900,000, and the annual expenses are estimated at $85,000. The planning department estimates annual benefits to be $150,000. The city uses a 5% interest rate and a study period of 20 years. How large does the salvage or residual value have to be for the project to have a PW > 0?

Reference no: EM131807368

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