A bridge is to be constructed now as part of a new road. An analysis has shown thattraffic density on the new road will justify a two-lane bridge at…

1. A bridge is to be constructed now as part of a new road. An analysis has shown thattraffic density on the new road will justify a two-lane bridge at the present time. Becauseof uncertainty regarding future use of the road, the time at which an extra two lanes willbe required is currently being studied. The estimated probabilities of having to widen thebridge to four lanes at various times in the future are as follows:Widen Bridge InProbability3 years0.14 years0.25 years0.36 years0.4The present estimated cost of the two-lane bridge is $2,100,000. If constructed now, thefour-lane bridge will cost $4,000,000. The future cost of widening a two-lane bridge willbe an extra $2,100,000 plus $350,000 for every year that widening is delayed. If moneycan earn 12% per year, what would you recommend?

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