Answer Happy

Problem 2 You are working with a consultant company that specializes in total project work, including planning, design, and construction. Your client is a turnpike authority that has asked for an economic analysis of a proposed highway toll road project. The estimating department of your company has just completed their study and has developed a construction cost for the project of $210,350,750. They also recommend adding 8% to the construction cost to cover the initial legal and financing fees for the project. The planning division of your company has just completed the average daily traffic (ADT), anticipated fees as revenue, maintenance and repairs, and operating expenses associated with the project. Table 1 presents the results of that study. (Use Excel spreadsheet to perform the calculation) 1. Perform a present worth economic analysis of the project based on the above information to determine the rate of return (i). Calculate i to the nearest two decimal places. (10 pts) (Answer: 12.92%) 2. Based on your answer in part 1, if the client wants a 12% return on their investment, is the project economically feasible? (1 pts) 3. Perform the same calculations but now assume that the project has a salvage value of $33,000,000 at the end of year 10. (3 pts) (Answer: 13.81%)