Homework3: A company produces organic products (Fertilizes) and needs to construct a building to store its products. Two options were available to the company: the first option is executing A reinforced concrete structure with a cost of $160,000, and the second choice is building A steel-framed structure with a cost of $60,000. The estimated useful life of the concrete building is 60 years with no need for repair cost for the first ten years of the building's age, while the repair cost for the other years is $1,000 a year. The estimated age of the steel building is 20 years with a repair cost of $1,150 a year. The salvage value of the concrete building and steel building is $40,000 and $6,000, respectively. If the interest rate is 10%, which option is more economic for the company? (Hint: to perform a comparison you need to find the annual equivalent of the uniform payment series).

Homework3: A company produces organic products (Fertilizes) and needs to construct a building to store its products. Two options were available to the company: the first option is executing A reinforced concrete structure with a cost of $160,000, and the second choice is building A steel-framed structure with a cost of $60,000. The estimated useful life of the concrete building is 60 years with no need for repair cost for the first ten years of the building's age, while the repair cost for the other years is $1,000 a year. The estimated age of the steel building is 20 years with a repair cost of $1,150 a year. The salvage value of the concrete building and steel building is $40,000 and $6,000, respectively. If the interest rate is 10%, which option is more economic for the company? (Hint: to perform a comparison you need to find the annual equivalent of the uniform payment series).

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter17: Elemental Estimating

Section: Chapter Questions

Problem 6RQ

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