11.1. Asphalt and Concrete Pavements A local government faces the classic dilemma of choosing between a design with high first cost and longer life and one with a lower first cost but shorter life: concrete versus asphalt pavements for an access road. The projected first cost per square yard of roadway is $21.00 for the concrete pavement and $17.80 for the asphalt. Either pavement would have to be resurfaced eventually with asphalt, but at different times. The best information is that the concrete base was to be resurfaced every 27 years, and the asphalt base every 17 years. Annual maintenance costs for either roadway will be $8000 (a) Assuming a 10% real discount rate, how much cheaper would the more expensive material have to become to be competitive on this job (b) At what rate or interest are the two costs equal? (c) Which solution would you recommend if (1) the national government pays 50% of the initial costs but none of the maintenance or replacement costs (a typical kind of subsidy) or (2) the local government sells municipal bonds that, because of tax advantages, only have to pay 6% real interest