Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 32

A large land-grant university that is currently facing severe parking problems on its campus is considering constructing parking decks off campus. A shuttle service could pick up students at the off-campus parking deck and transport them to various locations on campus. The university would charge a small fee for each shuttle ride, and the students could be quickly and economically transported to their classes. The funds raised by the shuttle would be used to pay for trolleys, which cost about $170,000 each. Each trolley has a 12-year service life, with an estimated salvage value of $ 12,000. To operate each trolley, additional expenses will be incurred, as given in Table.
TABLE 34
If students pay 10 cents for each ride, determine the annual ridership per trolley (number of shuttle rides per year) required to justify the shuttle project, assuming an interest rate of 6%.