What discount rate would cause the two alternatives

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Reference no: EM131222359

The narrow gravel road to Jenzen Lake is open only for the summer months. At present the county spends $750 per mile to prepare the road for summer traffic and another $150.00 per mile for maintenance for the period that it is open.

A permnanent road could be constructed at a cost of $10,000 per mile; the county would have to spend $800 per mile for maintenance only every 5 years through the 30 year life of the road. Prospects suggest the road would have to be relocated at the end of that period. If 8% is a reasonable discount rate, which option is less costly. What discount rate would cause the two alternatives to have the same cost in present value terms.

This needs to be done in Microsoft Excel format.

Reference no: EM131222359

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