Question: 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

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?

(d) Research the relationship between road surfacing and environmental impact. You may be surprised!

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a Choice Table Interest Rate Current Spec New Spec 0 15M 21M 5 163M 230M 10 177M 251M 15 193M 275... View full answer

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