
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
March 4th, 2010, 04:13 AM  #1 
Newbie Joined: Mar 2010 Posts: 3 Thanks: 0  Should the twostage or onestage construction be selected?
Problem statement: The State of Georgia wants to build a new railway from Atlanta to Rome, Georgia. A twolane highway can be built now for $300 million and can be enlarged adding two more lanes 25 years from now for an additional $350 million to accommodate future growth. An alternative is to construct the fourlane highway (fullsized) now for $400 million. Both alternatives would provide the needed capacity for the 50year analysis period. Maintenance costs are minimal and can be ignored. At a 6% interest rate, should the twostage or onestage construction be selected? I'm assuming that building the highway now for $400 is cheaper, but I'm not sure how to do the math. 
March 4th, 2010, 07:14 AM  #2 
Global Moderator Joined: Nov 2006 From: UTC 5 Posts: 16,046 Thanks: 938 Math Focus: Number theory, computational mathematics, combinatorics, FOM, symbolic logic, TCS, algorithms  Re: Should the twostage or onestage construction be selected?
How much would you have to save now to have $350 million in 25 years?


Tags 
construction, onestage, selected, twostage 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
Construction...  julian21  Algebra  4  November 2nd, 2010 02:49 AM 
Construction  BakyX  Algebra  3  November 2nd, 2010 01:00 AM 
Matrix problem: sum of selected columns  Ad78  Linear Algebra  2  November 19th, 2007 06:00 AM 
Randomly Selected People  symmetry  Advanced Statistics  0  June 20th, 2007 03:56 PM 
Box Construction  symmetry  Algebra  4  January 29th, 2007 01:20 PM 