Show complete manual solution It is proposed to place acable on an existing pole linealong the shore of a lake toconnect two points onopposite sides.Which is more economical?Use the following methodsto support your answer.a) Equivalent UniformAnnual Cost Method (showcash flow diagram)b) Rate of return onadditional investment Length, milesFirst cost of cable per mileAnnual Maintenance per mileInterest on investmentTaxesNet Salvage Value per mileLife, yearsLand Route10P 40,000P 95015%3%P 12,00010Submarine Route5P 68,000P 3,50015%3%P 22,00015

Equivalent annual cost or EAC is defined as the annual cost of owning, operations and maintenance of…

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It is proposed to place cable on an existing pole line along the shore of a lake to

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

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Question

Show complete manual solution

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

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