Using the current specifications, resurfacing a road will cost $1.5M initially, need $120K in annual maintenance,...

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

Answer rating: 100% (QA)

PlanA 001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 Maintenance Cost 12000000 12000000 12000000 ... View the full answer