Question

In: Finance

A new toll lane is to be installed along interstate 10. Based upon current usage, you...

A new toll lane is to be installed along interstate 10. Based upon current usage, you think the new lane will bring in about $857,144 per year for the next 8 years. If inflation will grow 1% per year, what is the present value of the income generated from the toll lane?

Round you answer to the nearest $1,000.

Solutions

Expert Solution

Present Value of Annuity

Where i = Inflation Rate

n = no of Years = 8

PMT = Annual Income = $857,144

PV = 857,144 * 7.6516

PV = 65,58,589.67 ~ 65,59,000

Ans : present value of the income generated from the toll lane 65,59,000


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