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ng evaluated: ethod A. Dig a ditch. The first cost would be $60,000, and $25,000 d shaping would be required at five-year intervals forever. ethod B. Lay concrete pipe. The first cost would be $150,000, ar nt would be required at 50-year intervals at a net cost of $180,000 i = 12%, which method is the better one?

ng evaluated: ethod A. Dig a ditch. The first cost would be $60,000, and $25,000 d shaping would be required at five-year intervals forever. ethod B. Lay concrete pipe. The first cost would be $150,000, ar nt would be required at 50-year intervals at a net cost of $180,000 i = 12%, which method is the better one?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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q5.33

5.33 Two methods of carrying away surface runoff water from a new subdivision are being evaluated: Method A. Dig a ditch. The first cost would be $60,000, and $25,000 of redigging and shaping would be required at five-year intervals forever. Method B. Lay concrete pipe. The first cost would be $150,000, and a replace- ment would be required at 50-year intervals at a net cost of $180,000 forever. At i = 12%, which method is the better one?
Transcribed Image Text:5.33 Two methods of carrying away surface runoff water from a new subdivision are being evaluated: Method A. Dig a ditch. The first cost would be $60,000, and $25,000 of redigging and shaping would be required at five-year intervals forever. Method B. Lay concrete pipe. The first cost would be $150,000, and a replace- ment would be required at 50-year intervals at a net cost of $180,000 forever. At i = 12%, which method is the better one?
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