Two types of linings are under consideration for a certain chemical tank. A bituminous lining will have an initial cost of $6000 and, if touched-up after 3 years at a cost of $2000, it will last for 5 years. An epoxy coating will cost $18,000 initially, but it will last for 10 years. The interest rate is 12% per year. Based on the present worth, which of the following can be concluded:

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Two types of linings are under consideration for a certain chemical tank. A bituminous lining will have an initial cost of $6000 and,
if touched-up after 3 years at a cost of $2000, it will last for 5 years. An epoxy coating will cost $18,000 initially, but it will last for 10
years. The interest rate is 12% per year. Based on the present worth, which of the following can be concluded:
Bituminous lining is better with a costing saving of $11,636
O Bituminous lining is better with a costing saving of $6,354
Epoxy coating is better with a costing saving of $11,636
Epoxy coating is better with a costing saving of $5,200
Transcribed Image Text:Two types of linings are under consideration for a certain chemical tank. A bituminous lining will have an initial cost of $6000 and, if touched-up after 3 years at a cost of $2000, it will last for 5 years. An epoxy coating will cost $18,000 initially, but it will last for 10 years. The interest rate is 12% per year. Based on the present worth, which of the following can be concluded: Bituminous lining is better with a costing saving of $11,636 O Bituminous lining is better with a costing saving of $6,354 Epoxy coating is better with a costing saving of $11,636 Epoxy coating is better with a costing saving of $5,200
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