Convert each cost component to its present worth

Reference no: EM13243861

Interest rate: 10%
Alternitive A (tunnel)
Initialcost: $8,000,000
Economic life: 100years
O&M: $55,000/year
Alternitive B(canal)
Initial cost offlume: $900,000
Economic life of flume: 50years
Initial cost of canal (excludinglining) $1,000,000
Economic life of canal: 100years
Initial cost of concrete canallining: $550,000
Economic life of lining: 20years
Salvage (reuse) value of canal lining:$25,000
O&M: $120,000/year
Determine: (1) Present worth of each alternitive. Note: Do the exersise entirely on a present worth basis, not on anannualized basis. Convert each cost component to its presentworth and then sum to get the total present worth of eachalternitive.

(2) Best alternitive from an economic perspective.

Reference no: EM13243861

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