In: Economics
The highway department must select one of two repair options for a 10-mile of a four-lane highway. The analysis period is 8 years and interest rate (MAAR) is 8%
Option 1 | Option 2 | |
Initail Cost | 5,300,000 | 3,000,000 |
Annual cost | 300,000 | 400,000 |
Lifetime | 8 years | 4 years |
a) Using Present worth analysis, find the best repair option.
b) Using Annual worth analysis, find the repair option.
c) Using incremental rate of return analysis, find the best repair option. Use the shortcut of cheking at the MARR only.
(Please do not use Excel, Thank you)