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Economic Analysis ewnan restion (2) Jse capitalized cost to determine which type of oad surface is preferred on a particular
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Answer #1

CC of A = 500000 + 35000/ 0.12 + 350000 * (A/F, 12%,10) / 0.12

= 500000 + 35000/ 0.12 + 350000 * 0.056984 / 0.12

= 957870.48

CC of B = 700000 + 25000/ 0.12 + 450000 * (A/F, 12%,15) / 0.12

= 700000 + 25000/ 0.12 + 450000 * 0.026824 / 0.12

= 1008924.23

As CC of A is less, it should be selected

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