Duck Construction Has Proposed Two Alternatives for Constructing a New

Essay

Duck Construction has proposed two alternatives for constructing a new bridge in Oregon. Based on data from recent bridge construction projects of comparable size, the estimated costs for each alternative are given below. Use the conventional B- C ratio method, with PW as the equivalent- worth measure, to determine which alternative should be selected at an interest rate of 9% per year. Assume a study period of 35 years. $$\begin{array} { | l | l | l | } \hline & \text { Alternative I } & \text { Alternative II } \\\hline \text { Construction and design costs, } \$ \mathrm { M } & \$ 1,400,000 & \$ 1,410,000 \\\hline \text { Annual maintenance, } \$ / \mathrm { yr } & \$ 170,000 & \$ 190,500 \\\hline \text { Annual benefits, } \$ / \mathrm { yr } & \$ 690,000 & \$ 712,500 \\\hline\end{array}$$