A new highway is to be constructed. Design A calls for a concrete pavement costing $85 per foot with a 12-year life; two paved ditches costing $3 per foot each; and three box culverts every mile, each costing $7,000 and having a 12-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every three years at a cost of $550 each per mile. Design B calls for a bituminous pavement costing $30 per foot with a 6-year life; three sodded ditches costing $1.70 per foot each; and four pipe culverts every mile, each costing $2,300 and having a 6-year life. The replacement culverts will cost $2,450 each Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $215 each per mile; and the annual ditch maintenance will cost $1.65 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 12-year period. Find the most economical design on the basis of AW and PW if the MARR is 8% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year.

A new highway is to be constructed. Design A calls for a concrete pavement costing $85 per foot with a 12-year life; two paved ditches costing $3 per foot each; and three box culverts every mile, each costing $7,000 and having a 12-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every three years at a cost of $550 each per mile. Design B calls for a bituminous pavement costing $30 per foot with a 6-year life; three sodded ditches costing $1.70 per foot each; and four pipe culverts every mile, each costing $2,300 and having a 6-year life. The replacement culverts will cost $2,450 each Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $215 each per mile; and the annual ditch maintenance will cost $1.65 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 12-year period. Find the most economical design on the basis of AW and PW if the MARR is 8% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

A new highway is to be constructed. Design A calls for a concrete pavement costing $85 per foot with a 16-year life; three paved ditches costing $4 per foot each; and four box culverts every mile, each costing $8,000 and having a 16-year life. Annual maintenance will cost $1,700 per mile; the culverts must be cleaned every four years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $40 per foot with a 8-year I four sodded ditches costing $1.45 per foot each; and two pipe culverts every mile, each costing $2,200 and having a 8-year life. The replacement culverts will cost $2,500 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $220 each per mile; and the annual ditch maintenance will cost $1.65 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 16-year period. Find the most economical design on the basis of AW and PW if the MARR is 8% per year. Click the icon to…
A new highway is to be constructed. Design A calls for a concrete pavement costing $80 per foot with a 20-year life; four paved ditches costing $3 per foot each; and four box culverts every mile, each costing $10,000 and having a 20-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every five years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $55 per foot with a 10-year life; four sodded ditches costing $1.40 per foot each; and four pipe culverts every mile, each costing $2,100 and having a 10-year life. The replacement culverts will cost $2,450 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.55 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 12% per year. Click the…
A new highway is to be constructed. Design A calls for a concrete pavement costing $90 per foot with a 12-year life; two paved ditches costing $4 per foot each; and two box culverts every mile, each costing $7,000 and having a 12-year life. Annual maintenance will cost $1,700 per mile; the culverts must be cleaned every three years at a cost of $550 each per mile. Design B calls for a bituminous pavement costing $40 per foot with a 6-year life; three sodded ditches costing $1.50 per foot each; and three pipe culverts every mile, each costing $2,100 and having a 6-year life. The replacement culverts will cost $2,350 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $230 each per mile; and the annual ditch maintenance will cost $1.30 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 12-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% per year. Click the…
Find both for design A and B then decide which one is the most economical, thank you.
Do not use excel please. Show equations used.
Wall’s Pharmacy will have to sell a new product that has an estimated revenue of $5,100 per month and costs of $1,000 per month with an initial purchase of $28,000. How long will Wall's Pharmacy have to sell a new product if the MARR is 3% per month? Wall's Pharmacy will have to sell a new product for __ months.
Calculate the annual net benefit from the given project summary. Capital Costs = $43,000; Revenue = $16,000/year; Operation and Maintenance Costs = $7,800/year Salvage Value = $19,000; Project Lifetime = 6 years; Effective Interest Rate = 0.09.
A9.
Need help ty!
A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years, after which its reservoir will be full of sediment and the dam will need to be removed. The following are characteristics of the dam: Initial Cost: $100,000,000 Electricity produced: 100,000 MWh per year, at $100/MWh. Cost of decommissioning dam: $10,000,000. Value of recreation lost: $5,000,000 per year. 1. If the social discount rate is 3% per year, is the dam a good idea? 2. If the social discount rate is 10% per year, is the dam a good idea? 3. Calculate the "cutoff" discount rate, c3 such that the dam is a good idea for discount rates c.
1. The Present Worth Method A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?
10. Solve the given question and give the correct answer.