Which is the best alternative (in terms of cost savings)?
for $4 Show more An old covered wooden bridge can be strengthened at the cost of $9000 or it can be replaced for $40000. The present salvage value of the old bridge is $13000. It is estimated that the reinforced bridge will last for 20 years will have an annual cost of $500 and will have a salvage value of $10000 at the end of 20 years. The estimate salvage value of the new bridge after 25 years is $15000. Maintenance for the new bridge would cost $100 annually. The effective annual interest rate is 8%. Which is the best alternative (in terms of cost savings)? Review alternatives in context to annual worth. a. Old Bridge b. New Bridge Show less
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