removal cost by $15,000. If it is reinforced, et) value would be $18,000 at the time it is concrete overpass would cost $140,000 ements of the next 40 years. Such a designv

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A steel pedestrian overpass must either be reinforced or replaced. Reinforcement
would cost $25,000 and would make the overpass adequate for an additional 6
years of service. If the overpass is torn down now, the scrap value of the steel
would exceed the removal cost by $15,000. If it is reinforced, it is estimated that its
net salvage (market) value would be $18,000 at the time it is retired from service.
A new pre-stressed concrete overpass would cost $140,000 and would meet the
foreseeable requirements of the next 40 years. Such a design would have no scrap
value or market value. It is estimated that the annual expenses of the reinforce
overpass would exceed those of the concrete overpass by $3,200. Assume that
money costs 8% per year, what would you recommend?
3.
Transcribed Image Text:A steel pedestrian overpass must either be reinforced or replaced. Reinforcement would cost $25,000 and would make the overpass adequate for an additional 6 years of service. If the overpass is torn down now, the scrap value of the steel would exceed the removal cost by $15,000. If it is reinforced, it is estimated that its net salvage (market) value would be $18,000 at the time it is retired from service. A new pre-stressed concrete overpass would cost $140,000 and would meet the foreseeable requirements of the next 40 years. Such a design would have no scrap value or market value. It is estimated that the annual expenses of the reinforce overpass would exceed those of the concrete overpass by $3,200. Assume that money costs 8% per year, what would you recommend? 3.
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