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A railroad branch line to a missile site is to be constructed It is

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A railroad branch line to a missile site is to be constructed.
It is expected that the railroad line will be used for 15
years, after which the missile site will be removed and the
land turned back to agricultural use. The railroad track and
ties will be removed at that time.
In building the railroad line, either treated or untreated
wood ties may be used. Treated ties have an installed cost
of $6 and a 10-year life; untreated ties are $4.50 with a 6-
year life. If at the end of 15 years the ties then in place
have a remaining useful life of 4 years or more, they will
be used by the railroad elsewhere and have an estimated
average value of $3 each. Any ties that are removed at the
end of their service life, or too close to the end of their
service life to be used elsewhere, can be sold for $0.50
each.
Determine the most economical plan for the initial railroad
ties and their replacement for the 15- year period. Make a
present worth analysis assuming 8% interest.
Solution
since present value of net cost of untreated ties is higher
than treated ties, so treated ties give higher return in
monetary terms.Treated tiesuntreated tiesinstallation cost
164.5Life year106average value after 15
years30.5replacement number12Treated tiespresent
worthuntreated tiespresent worth1 instalation cost-6-6-4.5-

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A railroad branch line to a missile site is to be constructed. It is expected that the railroad line will be used for 15 years, after which the missile site will be removed and the land turned back to agricultural use. The railroad track and ties will be removed at that time. In building the railroad line, either treated or untreated wood ties may be used. Treated ties have an installed cost of $6 and a 10-year life; untreated ties are $4.50 with a 6 year life. If at the end of 15 years the ties th en in place have a remaining useful life of 4 years or more, they will be used by the railroad e ...
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