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anonymous

  • one year ago

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  1. anonymous
    • one year ago
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    (10 points) The city of Middleville is considering offering public bus service. Setting up the service will cost the city $1.1M (where M stands for million). The useful life of the buses is 27 years. Annual maintenance of the buses would cost $86,000 per year and they would need a major overhaul in year 21 that will cost a total of $560,000. This overhaul is in addition to the annual maintenance. Annual labor and administrative costs will begin at $120,000 in year 1 and grow at 2.5% per year thereafter. The buses will generate a revenue of $170,000 in year 1 and it will grow at 4.5% per year thereafter. Reduced parking requirements and other benefits generated by the project will save the city $270,000 per year. The salvage value (price the city can get in the future after maintenance) of the used buses in year 27 is expected to be $290,000. What is the NPV of the bus proposal? The city does not pay taxes and the discount rate is 5.9%. Assume that all cash flows except initial investments happen at the end of the year and you are strongly encouraged to use a spreadsheet to solve this problem.

  2. sohailiftikhar
    • one year ago
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    (y) nice Question ...

  3. anonymous
    • one year ago
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    Please help

  4. anonymous
    • one year ago
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    @.Sam.

  5. sohailiftikhar
    • one year ago
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    it's very lengthy to read ...

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