An alternative method of construction would be to construct a bridge of pre-stressed concrete construction. The estimated life of such a structure will be 20 years. The first cost would be $150,000 and it would have a salvage value of $20,000 at the end of its useful life. The yearly maintenance cost would be $2,000. What would be the total yearly cost? The interest rate is 8%.
An alternative method of construction would be to construct a bridge of pre-stressed concrete construction. The estimated life of such a structure will be 20 years. The first cost would be $150,000 and it would have a salvage value of $20,000 at the end of its useful life. The yearly maintenance cost would be $2,000. What would be the total yearly cost? The interest rate is 8%.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An alternative method of construction would be to construct a bridge of pre-stressed concrete construction. The estimated life of such a structure will be 20 years. The first cost would be $150,000 and it would have a salvage value of $20,000 at the end of its useful life. The yearly maintenance cost would be $2,000. What would be the total yearly cost? The interest rate is 8%.
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Step 1
Present value is the value of investment in today's dollar.
Future value is the value of investment at the end of planning horizon.
TVM factor table is used for calculating the value of factor.
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