A new highway is to be constructed. Design A calls for a concrete pavement costing P3600 per foot with a 20-year life; two paved ditches costing P120 per foot each; and three box culverts every mile, each costing P360,000 and having a 20-year life. Annual maintenance will cost P72,000 per mile; the culverts must be cleaned every five years at a cost of P18,000 each per mile. Design B calls for a bituminous pavement costing P1800 per foot with a 10-year life; two sodded ditches costing P60 per foot each; and three pipe culverts every mile, each costing P90,000 and having a 10-year life. The replacement culverts will cost P96,000 each. Annual maintenance will cost P108,000 per mile; the culverts must be cleaned yearly at a cost of P9000 each per mile; and the annual ditch maintenance will cost P60 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 1/1 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% pe.

A new highway is to be constructed. Design A calls for a concrete pavement costing P3600 per foot with a 20-year life; two paved ditches costing P120 per foot each; and three box culverts every mile, each costing P360,000 and having a 20-year life. Annual maintenance will cost P72,000 per mile; the culverts must be cleaned every five years at a cost of P18,000 each per mile. Design B calls for a bituminous pavement costing P1800 per foot with a 10-year life; two sodded ditches costing P60 per foot each; and three pipe culverts every mile, each costing P90,000 and having a 10-year life. The replacement culverts will cost P96,000 each. Annual maintenance will cost P108,000 per mile; the culverts must be cleaned yearly at a cost of P9000 each per mile; and the annual ditch maintenance will cost P60 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 1/1 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% pe.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 15P

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A new highway is to be constructed. Design A calls for a concrete pavement costing 3600 per foot with a 20-year life, two paved ditches costing 120 per foot each and three box culverts every mile, each costing 360,000 and having a 20-year life. Annual maintenance will cost 72,000 per mile, the culverts must be cleaned every five years at a cost of 18,000 each per mile. Design B calls for a bituminous pavement costing 1800 per foot with a 10-year life, two sodded ditches costing 60 per foot each, and three pipe culverts every mile, each costing 90,000 and having a 10-year life. The replacement culverts will cost 96,000 each. Annual maintenance will cost 108,000 per mile, the culverts must be cleaned yearly at a cost of 9000 each per mile, and the annual ditch maintenance will cost 60 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 Annual Worth and Present Worth if the Minimum…
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