Spent on the corrosion resistant bridge

Reference no: EM13695089

A large company must build a bridge to have access to land for expansion of its manufacturing plant. The bridge could be fabricated of normal steel for an initial cost of $30,000 and should last 15 years. Maintenance will cost $1,000/year. If more corrosion resistant steel were used, the annual maintenance cost would be only $100/year, although the life would be the same. In 15 years there will be no salvage value for either bridge. The company pays a combined state and federal income tax rate of 48% and uses straight-line depreciation. If the minimum attractive after tax rate of return is 12%, what is the maximum amount that should be spent on the corrosion resistant bridge?

Note: points are going to be awarded only if the detailed calculation on excel are shown!

Reference no: EM13695089

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