document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1172337>Question 1172337</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Question 2<BR>\n" );
document.write( "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 20 years. Annual maintenance of the buses would cost $88,000 per year and they would need a major overhaul in year 14 that will cost a total of $605,000. This overhaul is in addition to the annual maintenance. Annual labor and administrative costs will begin at $135,000 in year 1 and grow at 1.5% per year thereafter. The buses will generate a revenue of $185,000 in year 1 and it will grow at 5.5% per year thereafter. Reduced parking requirements and other benefits generated by the project will save the city $220,000 per year. The salvage value (price the city can get in the future after maintenance) of the used buses in year 20 is expected to be $295,000. 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.\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #797347 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52800)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=797347\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .\r<BR>\n" );
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document.write( "This problem is deeply specialized in Finance.\r<BR>\n" );
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document.write( "At this forum, we do not provide help with such problems.\r<BR>\n" );
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document.write( "It is not our specialty and is not a profile of this forum.\r<BR>\n" );
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document.write( "Find another site to get help with it . . . \r<BR>\n" );
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document.write( "Have a nice day and stay safe.\r<BR>\n" );
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