It is proposed to place a cable on an existing pole line along the shore of a lake to connect two points on opposite sides. Which is more economical? Use the following methods to support your answer. a) Equivalent Uniform Annual Cost Method (show cash flow diagram) b) Rate of return on additional investment

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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It is proposed to place a cable on an existing pole line along the shore of a lake to connect two points on opposite sides.

Which is more economical? Use the following methods to support your answer.
a) Equivalent Uniform Annual Cost Method (show cash flow diagram)
b) Rate of return on additional investment

Length, miles
First cost of cable per mile
Annual Maintenance per mile
Interest on investment
Taxes
Net Salvage Value per mile
Life, years
Land Route
10
P 40,000
P 950
15%
3%
P 12,000
10
Submarine Route
5
P 68,000
P 3,500
15%
3%
P 22,000
15
Transcribed Image Text:Length, miles First cost of cable per mile Annual Maintenance per mile Interest on investment Taxes Net Salvage Value per mile Life, years Land Route 10 P 40,000 P 950 15% 3% P 12,000 10 Submarine Route 5 P 68,000 P 3,500 15% 3% P 22,000 15
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