Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 45

A flagship hotel in Cedar Falls must construct a retaining wall next to its parking lot due to the widening of the city's main thoroughfare located in front of the hotel. The amount of rainfall experienced in a short time may cause damage in varying amounts, and the wall increases in cost in order to protect against larger and faster rainfalls. The probabilities of a specific amount of rainfall in a 30-minute period and wall cost estimates are as follows: The wall will be financed through a 6% per year loan. The principal and interest will be repaid over a 10-year period. Records indicate an average damage of $50,000 has occurred with heavy rains, due to the relatively poor cohesive properties of the soil along the thoroughfare. A discount rate of 6% per year is applicable. Find the amount of rainfall to protect against by choosing the retaining wall with the smallest AW value over the 10-year period.