JKR is considering paving roads in a district either using concrete or tar. Concrete will last for 10 years while tar will last for 5 years. Data for each alternative is included in the table below. Using an interest rate of 6% determine which alternative is best based on the EUAW

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Costs or Disbursements Initial cost Operating and maintenance costs Salvage value Life in years Concrete Paving Process $20,000,000.00 $1,000,000.00 $2,500,000.00 10 Asphalt Paving Process $5,000,000.00 $2,000,000.00 - 5 Costs or Disbursements Initial cost Operating and maintenance costs Salvage value Life in years Concrete Paving Process $20,000,000.00 $1,000,000.00 $2,500,000.00 10 Asphalt Paving Process $5,000,000.00 $2,000,000.00 - 5

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Where PVPresent value AAnnuity payment iInterest rate nNumber of payments Example You have an annuit... View the full answer