Two possible routes for a power line are under study. In both cases the powerline will last 15 years, have no salvage value, have annual property taxes of 2% of first cost, and have a yearly power loss of$500/km.

(a) If 6% interest is used, should the power line be routed around the lake or under the lake?

(b) Solve this problem for the breakeven first cost per kilometer of going under the lake.

Solve part b by hand

Length First Cost Maintenance Around the Lake Under the Lake 15 km 5 km $9000/km $25,000/km $200/km/yr $300/km/yr