Engineering Economy 16th Edition by William Sullivan ,Elin Wicks, Koelling,

Exercise 1

The Metropolitan Transit Authority (MTA) has just opened a new subway line (the Orange Line) in its underground transportation network. The Orange Line had a capital investment of $20 million, expected operating and maintenance expenses are $3 million per year, and the final salvage value at the end of a 40-year life is negligible. If the revenue generated by each customer is $3, how many customers per day will be required before the Orange Line can break even The MTA's hurdle (interest) rate is 5% compounded annually. Assume there are 365 days in a year.