Decide whether it should hot-patch

Assignment Help Business Economics

Reference no: EM131084908

A state highway department is trying to decide whether it should “hot-patch” a short section of an existing county road or resurface it. If the hot-patch method is used, approximately 300 cubic meters of material would be required at a cost of $700 per cubic meter. Additionally, the shoulders will have to be improved at the same time at a cost of $24,000. These improvements will last 2 years, at which time they will have to be redone. The annual cost of routine maintenance on the patched up road would be $5000. Alternatively, the state can resurface the road at a cost of $850,000. This surface will last 10 years if the road is maintained at a cost of $2000 per year beginning 3 years from now. No matter which alternative is selected, the road will be completely rebuilt in 10 years. At an interest rate of 8% per year, which alternative should the state select on the basis of an annual worth analysis? Do NOT use excel. Be sure to explicitly write out the appropriate formulas and corresponding values in your solution.

Reference no: EM131084908

Questions Cloud

Determine the ways to make up a full load : A plane has capacity 15, 921 pounds. A company wants to ship two types of motorcycles, one 957 pounds and one 609 pounds. Determine the ways to make up a full load with these two types of motorcycles

Causes of human diseases : This week we learned that causes of human diseases can be divided into six (6) categories:

Recognized at fair value of the assets exchanged unless : A nonmonetary exchange is recognized at fair value of the assets exchanged unless

What about the amino acid : The DNA coding strand for a gene is AGT ATG GCC CGT ACA and reads from left to right. What messenger RNA would be sent to the cytoplasm? What about the amino acid (AA) sequence?

Decide whether it should hot-patch : A state highway department is trying to decide whether it should “hot-patch” a short section of an existing county road or resurface it. If the hot-patch method is used, approximately 300 cubic meters of material would be required at a cost of $700 p..

Explain one real-life example of tragedy of the commons : Explain one real-life example of Tragedy of the Commons in natural resources, and propose an economic solution to the problem. Explain how this solution would work, and also explain one drawback to this solution (for example, is there a spillover aff..

Using equivalent uniform annual worth : A machine, with a first cost of $20,000, is expected to save $1,500 in the first year of operation and the savings should increase by $200 every year until (and including) the ninth year, thereafter the savings will decrease by $150 until (and includ..

Company has minimum rate of return standard : If the company has minimum rate of return standard as 10%, which of the following projects would you recommend to the company? A) Investment in year 0, $40,000, returns $10,000 in year 1, $11,000 in year 2, 12,000 in year 3, and $13,000 in year 4. Op..

Draw keynesian short-run aggregate supply curve : Draw a Keynesian short-run aggregate supply curve in which there is excessive unemployment and unused capacity in the economy. If aggregate demand were to increase along a Keynesian short-run aggregate supply curve, what would happen to the price lev..

User Account

All Pages