RR must build a tunnel to maintain his access around the mountain. The tunnel could be fabricated of normal steel for an initial cost of $45,000 and should last for 15 years. Maintenance will cost $1,000 per year. Another option would be to use corrosion resistant steel, which will last for 15 years, with annual maintenance cost of $100. In 15 years there would be no salvage value for either bridge. RR pays combined federal and state taxes at the 40% marginal rate and uses straight-line depreciation. If the after tax MARR is 12%, what is the maximum amount that should be spent on the corrosion-resistant tunnel? Enter your answer as follow: 123456.78

RR must build a tunnel to maintain his access around the mountain. The tunnel could be fabricated of normal steel for an initial cost of $45,000 and should last for 15 years. Maintenance will cost $1,000 per year. Another option would be to use corrosion resistant steel, which will last for 15 years, with annual maintenance cost of $100. In 15 years there would be no salvage value for either bridge. RR pays combined federal and state taxes at the 40% marginal rate and uses straight-line depreciation. If the after tax MARR is 12%, what is the maximum amount that should be spent on the corrosion-resistant tunnel? Enter your answer as follow: 123456.78

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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