Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 43P

Two methods of carrying away surface runoff water from a new subdivision are being evaluated.

  • Method A. Dig a ditch. The first cost would be $60,000, and $25,000 of re-digging and shaping would be required at five-year intervals forever.
  • Method B. Lay concrete pipe. The first cost would be $150,000, and a replacement would be required at 50-year intervals at a net cost of $180,000 forever.

At i = 12%, which method is the better one?

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