The city of Middleville is considering offering public bus service. Setting up the service will cost the city $1.2M (where M stands for million). The useful life of the buses is 25 years. Annual maintenance of the buses would cost $100,000 per year and they would need a major overhaul in year 15 that will cost a total of $700,000. This overhaul is in addition to the annual maintenance. Annual labor and administrative costs will begin at $180,000 in year 1 and grow at 2% per year thereafter. The buses will generate a revenue of $150,000 in year 1 and it will grow at 4% per year thereafter. Reduced parking requirements and other benefits generated by the project will save the city $200,000/year. The salvage value (price the city can get in the future after maintenance) of the used buses in year 25 is expected to be $300,000. What is the NPV of the bus proposal? The city does not pay taxes and the discount rate is 5%.
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but I want to give you my sincerest thank you for helping me throughout this assignment! Honestly, you are an absolute legend! Your line by line explanation was superb and honestly helped me understand most of the concept I learnt during my semester better than my own lecturer! Thank you for consistently helping and being persistent with the versions!
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So thank you once again!