To remedy the traffic situation at a busy intersection in Quezon City, two plans are being considered. Plan A is to build a cloverleaf costing P 9,200,000 which would provide all the needs during the next 30 years. Maintenance costs are estimated to be P 24,000 a year for the first 15 years and P 42,000 a year for the second 15 years. Plan B is to build a partial clover-leaf at a costs of P 6,500,000 which would be sufficient for the next 15 years. At the end of 15 years, the cloverleaf will be completed at an estimated cost o P 7,500,000. Maintenance would cost P 16,800 a year during the first 15 years and P 36,000 a year for the second 15 years. If money is worth 18%, which of the two plans would you recommend
To remedy the traffic situation at a busy intersection in Quezon City, two plans are being considered. Plan A is to build a cloverleaf costing P 9,200,000 which would provide all the needs during the next 30 years. Maintenance costs are estimated to be P 24,000 a year for the first 15 years and P 42,000 a year for the second 15 years. Plan B is to build a partial clover-leaf at a costs of P 6,500,000 which would be sufficient for the next 15 years. At the end of 15 years, the cloverleaf will be completed at an estimated cost o P 7,500,000. Maintenance would cost P 16,800 a year during the first 15 years and P 36,000 a year for the second 15 years. If money is worth 18%, which of the two plans would you recommend
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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To remedy the traffic situation at a busy intersection in Quezon City, two plans are being
considered. Plan A is to build a cloverleaf costing P 9,200,000 which would provide all the needs during the next 30 years. Maintenance costs are estimated to be P 24,000 a
year for the first 15 years and P 42,000 a year for the second 15 years.
Plan B is to build a partial clover-leaf at a costs of P 6,500,000 which would be sufficient
for the next 15 years. At the end of 15 years, the cloverleaf will be completed at an
estimated cost o P 7,500,000. Maintenance would cost P 16,800 a year during the first
15 years and P 36,000 a year for the second 15 years. If money is worth 18%, which of
the two plans would you recommend?
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