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A railway track will be used for 15 years. During the construction of the railway track...

A railway track will be used for 15 years. During the construction of the railway track line, either type A or type B ties may be used. Type A ties have an installed cost of $6 and a 10-year life; type B will cost $4.50 with a 6-year life. If at the end of 15 years the ties used have a remaining useful life of at least 4 years they will be used elsewhere for a different project and can fetch a salvage value of $3 each. Any ties that are taken off after the end of their life or if it is very near to the end of its life to be used elsewhere, then, it can be sold for $0.50 each. Give the most cost effective plan for the 15 year analysis period using NPW method at 8% interest.
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Answer #1

The present worth of untreated ties is more than that of the treated ties. Thus, Treated ties would given higher monetary returns.

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