A railroad track runs down a street of a manufacturing complex and the freight cars frequently halt all movement on another company street which crosses it.
The traffic holdup adds up to an hour each day and the total daily cost of idle labor caused by the delay is estimated to be $130. The factory works 250 days each year. An underpass costing $125,000 will completely eliminate these delays.
The useful life of the structure is 25 years with no salvage value. The cost of operating the underpass is estimated to be $4,400 per year. The MARR for this project at 25%. Conduct an economic analysis and determine if the underpass should be built.