It is proposed to place a cable on existing pole line along the shore of a lake to connect two points on opposite sides. Land Route Submarine Route Length, miles 10 5 First cost of cable per mile P40, 000 P68, 000 Annual maintenance per mile P950 P3, 500 Interest on investment 17% 17% Taxes 3% 3% Net Salvage value per mile P12, 000 P22, 000 Life, years 15 15 Which is more economical using the RORAI method and what is the value of RORAI? A. RORAI = 18.94%, Submarine route is more economical. B. RORAI = 19.56%, Land route is more economical. C. RORAI = 18.35%, Submarine route is more economical. D. RORAI = 8.91%, Land route is more economical. %3D

It is proposed to place a cable on existing pole line along the shore of a lake to connect two points on opposite sides. Land Route Submarine Route Length, miles 10 5 First cost of cable per mile P40, 000 P68, 000 Annual maintenance per mile P950 P3, 500 Interest on investment 17% 17% Taxes 3% 3% Net Salvage value per mile P12, 000 P22, 000 Life, years 15 15 Which is more economical using the RORAI method and what is the value of RORAI? A. RORAI = 18.94%, Submarine route is more economical. B. RORAI = 19.56%, Land route is more economical. C. RORAI = 18.35%, Submarine route is more economical. D. RORAI = 8.91%, Land route is more economical. %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

It is proposed to place a cable on existing pole line along the shore of a lake to connect two
points on opposite sides.
Land Route
Submarine Route
Length, miles
10
First cost of cable per mile P40, 000
P68, 000
Annual maintenance per
mile
Interest on investment
P950
P3, 500
17%
17%
Taxes
3%
3%
Net Salvage value per mile P12, 000
P22, 000
Life, years
15
15
Which is more economical using the RORAI method and what is the value of RORAI?
A. RORAI = 18.94%, Submarine route is more economical.
%3D
B. RORAI = 19.56%, Land route is more economical.
C. RORAI = 18.35%, Submarine route is more economical.
D. RORAI = 8.91%, Land route is more economical.
%3D

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