Using the current specifications a new road will cost 15m, Ask an Expert

Economics

Using the current specifications, a new road will cost $1.5M initially, need $120K in annual maintenance, and need to be resurfaced every 10 years for $1.1M. A proposed new specification is expected to be more resistant to wear. The initial cost will be $2.1M with $90K in annual maintenance and resurfacing every 15 years for $1.3M. Use capitalized cost.

(a) Develop a choice table for interest rates from 0% to 25%.

(b) If the highway department's interest rate is 6%, which specification is preferred?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92637308

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