Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m at pit P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m Hauling cost/m/km P4 P4 Which of the 2 sites will give the lesser cost?

Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m at pit P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m Hauling cost/m/km P4 P4 Which of the 2 sites will give the lesser cost?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Question

a certain masonry dam requires 200000 cubic meters of gravel for its construction. the contractor found to possible sources for the gravel with the following data

Source A
Source B
Average distance, gravel pit to dam site
3 km
1.2 km
Gravel cost/m at pit
P10
Purchase price of pit
P800,000
Road construction necessary
P450,000
Overburden to be removed at P4.20/m³
90,000m?
Hauling cost/m?/km
P4
P4
Which of the 2 sites will give the lesser cost?

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Follow-up Question

A certain masonry dam requires 200,000 cu.m. of gravel for its
construction. The contractor found 2 possible sources for the gravel
with the following data
Average distance from gravel pit to
dam site
Gravel Cost/cu.m. at pit
Purchase price of pit
Road construction necessity
Overburden to be removed at
P4.20/cu.m
Hauling cost per cu.m. per km
Isabela
3 km
P800K
P450K
P4
Cagayan
1.2 km
P10
90K cu.m.
P4

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