3. It is proposed to place a cable on an existing pole line along the shore of a lake toconnect to points son opposite sides.Land RouteSubmarine RouteLength, milesFirst cost of cable per mileAnnual maintenance per mileInterest on investment10P40,000P68,0009503,50018%18%Тахes3%3%Net salvage value per mileLife, years12000220001515Which is more economical?Ans. The submarine cable is more economical; the rate of return on additionalinvestment is only 8.97%.

Land Route: First cost of cable is calculated as follows. Annual maintenance cost is calculated as…

3. It is proposed to place a cable on an existing pole line along the shore of a lake to connect to points son opposite sides. Land Route Submarine Route Length, miles First cost of cable per mile Annual maintenance per mile Interest on investment 10 5 P40,000 P68,000 950 3,500 18% 18% Тахes 3% 3% Net salvage value per mile Life, years 12000 22000 15 15 Which is more economical?

3. It is proposed to place a cable on an existing pole line along the shore of a lake to connect to points son opposite sides. Land Route Submarine Route Length, miles First cost of cable per mile Annual maintenance per mile Interest on investment 10 5 P40,000 P68,000 950 3,500 18% 18% Тахes 3% 3% Net salvage value per mile Life, years 12000 22000 15 15 Which is more economical?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.22
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