Using the current specifications resurfacing a road will


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

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Financial Management: Using the current specifications resurfacing a road will
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