Using the current specifications, a new road will cost $1.5M initially, need $120K in annual maintenance, and need to be resurfaced every 10 years for $1.1M. A proposed new specification is expected to be more resistant to wear. The initial cost will be $2.1M with $90K in annual maintenance and resurfacing every 15 years for $1.3M. Use capitalized cost.
(a) Develop a choice table for interest rates from 0% to 25%.
(b) If the highway department's interest rate is 6%, which specification is preferred?