Part of pavement restoration and maintenance program

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Reference no: EM131599745

Microsurfacing is part of a pavement restoration and maintenance program that seals the surface of a street that has minor cracking to prevent water from penetrating into the base material. The annual cost of the equipment (truck, tank, valves, etc.) is $109,000 per year and the material cost is $2.75 per square yard. Alternatively, regular street resurfacing requires equipment that has a first cost of $225,000 with a 15-year life and no salvage value. The variable cost for regular resurfacing is $13 per square yard. At an interest rate of 8% per year, how many square yards per year must be resurfaced for the two methods to break even?

Reference no: EM131599745

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