Regard salvage value as negative term of cost

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Reference no: EM131312312

An improvement to the roadway is desired from Philmont Scout Ranch to Springer in northeastern New Mexico. Alternative N (for north) costs $2, 400,000 initially and $ 155,000/year thereafter. Route SA (for south, Alternative A) will cost $4, 200,000 initially, and $88,000/year thereafter. Route SB is the same as SA with wider lanes and shoulders. It costs $5, 200,000 initially with maintenance at $125,000/year. User costs (regard user cost as benefits) considering time, operations, and safety are $625,000 for N, $410,000 for SA, mid $310,000 for SB. The salvage values (regard salvage value as negative term of cost) for N, SA, and SB after 20 years are 20 percent of initial cost, respectively. Using a MARR of 7 percent and a 20-year study period, which should be constructed? By using an incremental B/C analysis, show your suggestion.

Reference no: EM131312312

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