The Department of Public Works and Highways (DPWH) is considering the construction of a new highway through a scenic rural area. The road is expected to cost P50 million with annual upkeep estimated at P400,000. The improved accessibility is expected to result in additional income from tourists of P7 million per year. The road is expected to have a useful life of 25 years. If the rate of interest is 15%, should the road be constructed?
The Department of Public Works and Highways (DPWH) is considering the construction of a new highway through a scenic rural area. The road is expected to cost P50 million with annual upkeep estimated at P400,000. The improved accessibility is expected to result in additional income from tourists of P7 million per year. The road is expected to have a useful life of 25 years. If the rate of interest is 15%, should the road be constructed?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Department of Public Works and Highways (DPWH) is considering the construction of a new
highway through a scenic rural area. The road is expected to cost P50 million with annual upkeep
estimated at P400,000. The improved accessibility is expected to result in additional income from
tourists of P7 million per year. The road is expected to have a useful life of 25 years. If the rate of
interest is 15%, should the road be constructed?
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