A section of road in the state highway system needs repair at a cost of $150,000. At present, the volume of traffic on the road is so low that few motorists would benefit from the work. However, future traffic is expected to increase, with resulting increased motorist benefits. The repair work will produce benefits for 10 years after it is completed. The highway' planning department is examining five mutually exclusive alternatives concerning the road repair. Should the road be repaired and, if so, when should the work is done? Use a 15% MARR.

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Repair 2 Years Repair Repair 5 Years Do Not Repair 4 Years Year Repair Now Hence Hence Hence -S150,000 5,000 10,000 20,000 30,000 -$150.000 20,000 30,000 $150,000 40.000 4 5 40,000 40.000 --$150,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 10 50,000 50,000 50,000 50,000 50.000 50,000 50,000 1! 50,00 50,000 12 13 14 15