A steel pedestrian overpass must either be reinforced or replaced. Reinforcement would cost $25,000 and would make the overpass adequate for an additional 6 years of service. If the overpass is torn down now, the scrap value of the steel would exceed the removal cost by $15,000. If it is reinforced, it is estimated that its net salvage (market) value would be $18,000 at the time it is retired from service. A new pre- stressed concrete overpass wo
A steel pedestrian overpass must either be reinforced or replaced. Reinforcement would cost $25,000 and would make the overpass adequate for an additional 6 years of service. If the overpass is torn down now, the scrap value of the steel would exceed the removal cost by $15,000. If it is reinforced, it is estimated that its net salvage (market) value would be $18,000 at the time it is retired from service. A new pre- stressed concrete overpass would cost $140,000 and would meet the foreseeable requirements of the next 40 years. Such a design would have no scrap value or market value. It is estimated that the annual expenses of the reinforce overpass would exceed those of the concrete overpass by $3,200. Assume that money costs 8% per year, what would you recommend?
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