hi everyone,
Not sure if I'm posting this particular problem in the right forum , but its worth a try.
The problem wants us to find the present value of a reconstruction alternative for a pavement.
Given:
$7,000,000 Reconstruction Cost
Anual Maitenance 1st 10 years ....... $40,000
2nd 10 years........$85,000
Major Maintenance ( every 10 yrs ) $350,000
Residual Value................................$400,000
So,
$7,000,000 + ($40,000)(P/A,i=5,n=10) + $(85,000)(P/A,i=5,n=10)(P/F,i=5,n=10) + ($350,000)(P/F,i=5,n=10) - ($400,000)(P/F,i=5,n=20)
Why is the 2nd anual cost multiplied by (P/F) ??
will appreciate any help.
Not sure if I'm posting this particular problem in the right forum , but its worth a try.
The problem wants us to find the present value of a reconstruction alternative for a pavement.
Given:
$7,000,000 Reconstruction Cost
Anual Maitenance 1st 10 years ....... $40,000
2nd 10 years........$85,000
Major Maintenance ( every 10 yrs ) $350,000
Residual Value................................$400,000
So,
$7,000,000 + ($40,000)(P/A,i=5,n=10) + $(85,000)(P/A,i=5,n=10)(P/F,i=5,n=10) + ($350,000)(P/F,i=5,n=10) - ($400,000)(P/F,i=5,n=20)
Why is the 2nd anual cost multiplied by (P/F) ??
will appreciate any help.