A railroad branch line to a landfill site is to be

Chapter , Problem 5-74

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A railroad branch line to a landfill site is to be con-structed. It is expected that the railroad line will beused for 15 years, after which the landfill site will beclosed and the land turned back to agricultural use.The railroad track and ties will be removed at that time. In building the railroad line, either treated oruntreated wood ties may be used. Treated ties havean installed cost of $6 and a 10-year life; untreatedties are $4.50 with a 6-year life. If at the end of 15years the ties then in place have a remaining usefullife of 4 years or more, they will be used by the rail-road elsewhere and have an estimated salvage valueof $3 each. Any ties that are removed at the end oftheir service life, or too close to the end of their ser-vice life to be used elsewhere, can be sold for 50?ceach.Determine the most economicalplan for the ini-tial railroad ties and their replacement for the 15-yearperiod. Make a present worth analysis assuming 8%interest