The Bureau of Public Highways is considering two possible types of road surfacing with cost estimates per kilometer as follows: Type A Type B First Cost P500k P650k Resurfacing period 8 years 12 years Resurfacing Cost P200k P250k Average annual maintenance cost P15k P20k The periodic resurfacing do not include the base of the subgrade. Compare these types by calculating the present worth for 24 year service, with no salvage value at the end of this time using interest rate of 10%. What is the Present Worth of Alternative B?
The Bureau of Public Highways is considering two possible types of road surfacing with cost estimates per kilometer as follows: Type A Type B First Cost P500k P650k Resurfacing period 8 years 12 years Resurfacing Cost P200k P250k Average annual maintenance cost P15k P20k The periodic resurfacing do not include the base of the subgrade. Compare these types by calculating the present worth for 24 year service, with no salvage value at the end of this time using interest rate of 10%. What is the Present Worth of Alternative B?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Bureau of Public Highways is considering two possible types of road surfacing with cost estimates per kilometer as follows:
|
Type A |
Type B |
First Cost |
P500k |
P650k |
Resurfacing period |
8 years |
12 years |
Resurfacing Cost |
P200k |
P250k |
Average annual maintenance cost |
P15k |
P20k |
The periodic resurfacing do not include the base of the subgrade. Compare these types by calculating the present worth for 24 year service, with no salvage value at the end of this time using interest rate of 10%. What is the Present Worth of Alternative B?
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