Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ɛ = interest rate). %3D Note: Show final answer in two decimal places and show complete solution with cash flow a. The Net Present Worth of this project = $ Blank 1 b. The IRR of this project = Blank 2% %3D c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4 %3D

Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ɛ = interest rate). %3D Note: Show final answer in two decimal places and show complete solution with cash flow a. The Net Present Worth of this project = $ Blank 1 b. The IRR of this project = Blank 2% %3D c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4 %3D

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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