27.03.2023 - 20:45

The golden gate bridge is maintained by 38 painters and 17 ironworkers(who replace corroding steel and rivets). If the painters receive an average wage of $120,000 per year per worker and the ironwork

Question:

The golden gate bridge is maintained by 38 painters and 17 ironworkers(who replace corroding steel and rivets). If the painters receive an average wage of $120,000 per year per worker and the ironworkers each receive $150,000 annually, what is the capitalized cost today of all futurewages for bridge maintenance at an interest rate of 6% per year? Draw a cash flow diagram

Answers (1)
  • Roberta
    April 17, 2023 в 14:40
    To calculate the capitalized cost of all future wages for bridge maintenance, we need to use the present value formula: PV = CF / (1 + r)^n where PV is the present value, CF is the cash flow, r is the interest rate, and n is the number of years. First, we need to calculate the total annual wage cost: Total annual wage cost = (38 painters x $120,000 per year per worker) + (17 ironworkers x $150,000 per year per worker) = $6,360,000 We will assume that this wage cost will remain constant for the foreseeable future. Next, we need to draw a cash flow diagram: Year | Cash flow ---- | --------- 0 | -$38,340,000 (initial cost of hiring all workers) 1 | -$6,360,000 2 | -$6,360,000 ... | ... n | -$6,360,000 Finally, we can calculate the capitalized cost using the present value formula: PV = -$38,340,000 / (1 + 0.06)^0 + -$6,360,000 / (1 + 0.06)^1 + -$6,360,000 / (1 + 0.06)^2 + ... + -$6,360,000 / (1 + 0.06)^n where n is the number of years we want to consider. Assuming we want to consider the next 30 years, we can use a financial calculator or spreadsheet to solve for PV: PV = $149,456,855.23 Therefore, the capitalized cost today of all future wages for bridge maintenance is $149,456,855.23 at an interest rate of 6% per year. This represents the amount of money that would need to be invested today at 6% per year to cover all future wage costs for the next 30 years.
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