To remedy the traffic situation at a busy intersection in Quezon City, two plans are being considered. Plan A is to build a complete clover-leaf costing PhP 100M which would provide for all the needs during the next 30 years. Maintenance costs are estimated to be PhP 200,000 a year for the first 15 years, and PhP 300,000 a year for the next 15 years. Plan B is to build a partial clover-leaf at a cost of PhP 70M which would be sufficient for the next 15 years. At the end of 15 years, the clover-leaf will be completed at an estimated cost of PhP 50M. Maintenance would cost PhP 120,000 a year during the first 15 years and PhP 220,000 a year during the next 15 years. If money is worth 10%, which of the two plans would you recommend and at what cost (PW)? DRAW CASHFLOW DIAGRAM.
To remedy the traffic situation at a busy intersection in Quezon City, two plans are being considered. Plan A is to build a complete clover-leaf costing PhP 100M which would provide for all the needs during the next 30 years. Maintenance costs are estimated to be PhP 200,000 a year for the first 15 years, and PhP 300,000 a year for the next 15 years. Plan B is to build a partial clover-leaf at a cost of PhP 70M which would be sufficient for the next 15 years. At the end of 15 years, the clover-leaf will be completed at an estimated cost of PhP 50M. Maintenance would cost PhP 120,000 a year during the first 15 years and PhP 220,000 a year during the next 15 years. If money is worth 10%, which of the two plans would you recommend and at what cost (PW)?
DRAW CASHFLOW DIAGRAM.
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