The Bureau of Public Highways is considering two possible types of road surfacing with cost estimates per kilometer as follows: Туре А Туре В 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: Туре А Туре В 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The Bureau of Public Highways is considering two possible types of road surfacing with cost estimates per kilometer as
follows:
Турe A
Туре В
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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