Question 6 0.75 pts RR must build a tunnel to maintain his access around the mou

Question

Question 6 0.75 pts RR must build a tunnel to maintain his access around the mountain. The tunnel could be fabricated of normal steel for an initial cost of $30,000 and should last for 15 years. Maintenance will cost $1,000 per year. cost of $30,000 and Another option would be to use corrosion resistant steel, which will last for 15 years, with annual maintenance cost of $100. In 15 years there would be no salvage value for either bridge. RR pays combined federal and state taxes at the 40% marginal rate and uses straight-line depreciation. If the afler iax MARR is 12%, what is the maximurn amount tat should be spent on the corrosion-resistant tunnel? Enter your answer as follow: 123456.78

Explanation / Answer

Answer is  34491.10

Let X is the maximum Amount

Solving X we get =-34491.10

PF factor -30000 1 -30000.00 After tax Operating Cost -600 6.810864489 -4086.52 Tax saving on depreciation 800 6.810864489 5448.69 Present Value of investment decision -28637.83

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