Question

The city of Mersey is planning to construct a bridge across the Cavendashim river. The first cost of the bridge will be $6611100. Annual maintenance and repairs will be $26233 for the first 5 years, and then will increase to $42927 for each of the next 10 years. For the final 5 years, the annual maintenance and repairs will increase again to $51791 per year. A major overhaul of $471158 will be performed at the end of year 9. Using an interest rate of 6%, what is the equivalent uniform annual cost for the 20-year period?

Hint: Since this is an equivalent uniform annual cost, do you need to indicate that as negative? See example 6-3 and 6-4 in the book.

Enter your answer as 1234

Round your answer. Do not use a dollar sign ("$"), any commas (","), or a decimal point (".").

Answer 1

Year	Cashflows	PVF at 6%	Present Value
0	-6611100	1	-6611100
1	-26233	0.943396	-24748.1
2	-26233	0.889996	-23347.3
3	-26233	0.839619	-22025.7
4	-26233	0.792094	-20779
5	-26233	0.747258	-19602.8
6	-42927	0.704961	-30261.8
7	-42927	0.665057	-28548.9
8	-42927	0.627412	-26932.9
9	-514085	0.591898	-304286
10	-42927	0.558395	-23970.2
11	-42927	0.526788	-22613.4
12	-42927	0.496969	-21333.4
13	-42927	0.468839	-20125.9
14	-42927	0.442301	-18986.7
15	-42927	0.417265	-17911.9
16	-51791	0.393646	-20387.3
17	-51791	0.371364	-19233.3
18	-51791	0.350344	-18144.7
19	-51791	0.330513	-17117.6
20	-51791	0.311805	-16148.7
Present value of outflows			-7327606
Divide: Annuity PVF at 6%			11.46992
Equivalent Annual cost			-638854
Answer is EACC = ($638854)