Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 42

The initial cost of a bridge that is expected to be in place forever is $70 million. Maintenance can be done at 1, 2, 3, or 4 year intervals, but the longer the interval between servicing, the higher the cost. The costs of servicing are estimated at $83,000, $91,000, $125,000, and $183,000 for intervals of 1 through 4 years, respectively. What interval should be scheduled for maintenance to minimize the overall equivalent annual cost The interest rate is 8% per year.