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Homework answers / question archive / A road between Yellowknife, NWT and Uranium City, Saskatchewan will have a most likely construction cost of $5 million per mile

A road between Yellowknife, NWT and Uranium City, Saskatchewan will have a most likely construction cost of $5 million per mile

Economics

A road between Yellowknife, NWT and Uranium City, Saskatchewan will have a most likely construction cost of $5 million per mile. Doubling this cost is considered to have a probability of 30%, and cutting it by 25% to have a probability of 10%. The government uses an interest rate of 8% for these types of projects, and the road should last 40 years. Calculate the expected value of the equivalent annual construction cost per mile

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