Question: Two possible routes for a power line are under study. In both cases the power line will last 15 years, have no salvage value, have
Two possible routes for a power line are under study. In both cases the power line will last 15 years, have no salvage value, have annual property taxes of 2% of ?rst cost, and have a yearly power loss of $500/km.
| Around the lake | Under the lake | |
| Length | 15 km | 5 km |
| First cost | $9000/km | $25,000/km |
| Maintenance | $200/km/yr | $300/km/yr |
If 6% interest is used, should the power line be routed around the lake or under the lake?
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