A new park is being built in Centre County and two different alternatives for ca

Question

A new park is being built in Centre County and two different alternatives for carrying away surface runoff water are being evaluated, with details below:

Alternative 1: Put in concrete pipe. The initial cost is $75,000. Additionally, replacement pipe would be required every 50 years at a cost of $90,000, and this need continues forever.

Alternative 2: Construct a ditch. The initial cost is $30,000. Additionally, the ditch will need some reshaping every 5 years at a cost of $10,000, and this need continues forever.

The Centre County government uses an interest rate of 12% for all economic evaluations. Considering all costs of each alternative, which alternative do you recommend and why?

Explanation / Answer

A new park is being built in Centre County and two different alternatives for ca

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