State highway department is planning the construction

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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. [Note: the toll is constant and does not vary year-to-year]

Reference no: EM13722326

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