Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. economics
  3. a state highway department is trying to decide whe

A state highway department is trying to decide whether it should “hot-patch” a short section of...

90.2K

Verified Solution

Question

Economics

A state highway department is trying to decide whether it should“hot-patch” a short section of an existing country road orresurface it. If the hot-patch method is used, approximately 300cubic meters of material would be required at a cost of $700 percubic meter (in place). Additionally, the shoulders will have to beimproved at the same time at a cost of $24,000. These improvementswill last 2 years, at which time they will have to be redone. Theannual 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. The surface will last 10 years if the road is maintainedat a cost of $2000 per year beginning 4 years from now. No matterwhich alternative is selected, the road will be completely rebuiltin 10 years. At an interest rate of 9% per year,

a. make a recommendation on the best alternative based on theannual worth analysis.

b. make a recommendation based on the present worth method

Answer & Explanation Solved by verified expert
3.9 Ratings (743 Votes)
The option1 requires material for 300 cubic meters and the rate is 700 per cubic meter and also needs shoulder improvement 300 700 24000 234000 This is valid for 2 years and the end of 2nd year the same cost will be again incurred The annual maintenance is 5000 per year Option B has an    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

When you swim you hold your breath to go under water. A) What is the effect...

Medical Sciences
Q

Most of the energy released in nuclear fission is electrostatic. Suppose a uranium-236 nucleus (92 protons...

Physics
Q

Question 1: To what extent is it accurate to describe the teenage years as “tumultuous?” Why...

Psychology
Q

Write about wireless transmission and explain how’s the transmission is occurred, what are the current technologies...

Electrical Engineering
Q

Quatro Company issues bonds dated January 1, 2021, with a par value of $400,000. The...

Accounting
Q

A customer has requested that Lewelling Corporation fill a special order for 2,300 units of...

Accounting
Q

The capital investment proposal based on the finance team assessment is favourable as it has...

Accounting
Q

Oswego Clay Pipe Company sold $45,000 of pipe to Southeast Water District 45 on April...

Accounting
Q

Dent Company incurred the following costs while producing 425 units: direct materials, $8 per unit;...

Accounting
Q

Dixon Development began operations in December 2024. When lots for industrial development are sold, Dixon...

Accounting
Q

Brief Exercise 10-17 Presented here are liability items for Shamrock, Inc. at December 31, 2019....

Accounting
Q

Question 6 (of 8) value: 15.00 points Brower Inc. has provided the following data concerning...

Accounting