You are the supervisor of a town where the roads are in need of repair. You have

Question:

You are the supervisor of a town where the roads are in need of repair. You have a limited budget and are considering two options:
• You can patch up the roads for $100,000, but you will have to repeat this expenditure every year to keep the roads in reasonable shape.
• You can spend $400,000 to repave and repair the roads, in which case your annual expenditures on maintenance will drop.
If your is 10%, how much would the annual expenditures have to drop in the second option for you to consider it?
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...