Two plan proposals for a bridge construction are to be evaluated. Plan A with an initial cost of P600,000 will have an estimated life of 30 years. Annual maintenance cost is P6,000.00, additional repairs every 5 years is P25,000 and salvage value after 30 years is P30,000. Plan B will have an estimated life of 50 years, an initial cost of P750,000, annual maintenance cost is P1,000, additional repairs every 5 years is P10,000 and salvage value is P125,000. If money is worth 9%, which of the two plan is economical?

Two plan proposals for a bridge construction are to be evaluated. Plan A with an initial cost of P600,000 will have an estimated life of 30 years. Annual maintenance cost is P6,000.00, additional repairs every 5 years is P25,000 and salvage value after 30 years is P30,000. Plan B will have an estimated life of 50 years, an initial cost of P750,000, annual maintenance cost is P1,000, additional repairs every 5 years is P10,000 and salvage value is P125,000. If money is worth 9%, which of the two plan is economical?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

answer with given
formula
and complete solution with explanation

2. Two plan proposals for a bridge construction are to be evaluated. Plan A with an
initial cost of P600,000 will have an estimated life of 30 years. Annual maintenance
cost is P6,000.00, additional repairs every 5 years is P25,000 and salvage value after 30
years is P30,000. Plan B will have an estimated life of 50 years, an initial cost of
P750,000, annual maintenance cost is P1,000, additional repairs every 5 years is
P10,000 and salvage value is P125,000. If money is worth 9%, which of the two plan is
economical?

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