Steve is working on estimating the costs of a bridge installed on the Kingston road....
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Accounting
Steve is working on estimating the costs of a bridge installed on the Kingston road. According to his estimation, the bridge needs $30,000 for the first 10 years, $40,000 for years 11 to 15, and $100,000 each year after that. The bridge has an infinite service life. If the sponsor expects 12% as a rate of return:
a. What is the present value of all the costs required for the project? (20 Marks)
b. What is the equivalent annual maintenance cost over the infinite service life of the bridge? (5 Marks)
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