Learning Activity 5

Direction. Copy and answer the given problem below. Round your answer to 3 decimal
places and submit your answer as a PDF file thru our google classroom.

1. To remedy the traffic situation at a busy intersection in San Fernando City, two plans are being
considered. Plan A is to build a complete clover-leaf costing P9,200,000 which would provide for all needs
during the next 30 years. Maintenance costs are estimated to be P24,000 a year for the first 15 years and
P42,000 a year for the second 15 years. Plan B is to build a partial clover-leaf at a cost of P6,500,000 which
would be sufficient for the next 15 years. At the end of 15 years, the clover-leaf will be completed at an
estimated cost of P7,500,000. Maintenance would cost P16,800 a year during the first 15 years and P36,000
a year for the second 15 years. If money is worth 18%, which of the two plans would you recommend?

2. A new highway is to be constructed. Design A calls for a concrete pavement costing P3600 per foot
with a 20-year life; two paved ditches costing P120 per foot each; and three box culverts every mile, each
costing P360,000 and having a 20-year life. Annual maintenance will cost P72,000 per mile; the culverts
must be cleaned every five years at a cost of P18,000 each per mile.
Design B calls for a bituminous pavement costing P1800 per foot with a 10-year life; two sodded
ditches costing P60 per foot each; and three pipe culverts every mile, each costing P90,000 and having a
10-year life. The replacement culverts will cost P96,000 each. Annual maintenance will cost P108,000 per
mile; the culverts must be cleaned yearly at a cost of P9000 each per mile; and the annual ditch maintenance
will cost P60 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a
20-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% per year.