Two different routes are under consideration for a new interstate highway:
Length of Highway First Cost Annual Upkeep Cost
The "long route" 22 miles $21 millions $140,000
Transmontain 10 miles $45 millions $165,000
shortcut
For either route, the volume of traffic will be 400,000 cars per year. These cars are assumed to operate at $0.25 per mile. Assuming a 40-year life for each road and an interest rate of 10%, determine which route should be selected.