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Since capital expenditure costs are assumed to take place at time zero, they are at present worth, then no discountiny is needed, The interest rate factor is set at the prime lendiny rate. Adding upfront capital costs to the present worth of annual costs allows the present rusts of each alterna- tive to be compared. It produces a truly comparable estimate of costs for alternatives involving different investment and operational characteristics and permits this estimate to he expressed as a single number, falculations then can be done and compared on various annual tonnaye rates to determine the rate at which any new alternative would be comparable to or better than the existing trucking system. For additional information on the method of analysis, refer to Principles of Engineering Economy by Euyene L. (rant and W. Grant Ireson. Total costs consist of basically two types, capital expenditure costs and annual operating and maintenance costs. As a general proposition when capi- tal expenditure costs are hiyh, annual costs tend to be low conversely, when Capital expenditure costs are low, annual costs tend to he hiyh. annual expenses consist of operating and maintenance costs. Operating expense consisting of the total amount currently paid to CWI contractor for trucking is the laryest component of the truck haulage costs. Analysis of the conveyor system indicates that additional labor would he needed for it over the existiny case because of additional facilities. Conveyor operatiny expenses would realize a saving in power because of the excess generated by a downhill conveyor system. The actual repair and maintenance expenses fora new transportation alterna- tive cannot really be determined until after construction of the facility. However, previous experience allows maintenance and repair expenses to he • approximated as a percentage of initial capitals. Experience with conveyors indicates that annual operatiny and maintenance costs are approximately 3 percent of the original capital investment. Maintenance costs of a truck haulaye system consists of road overlay due to the heavy tonnage truck traveliny the Steven's Gulch Road. As with any analysis involving future events, various assumptions must he made: 1) The "n" factor in the uniform series present worth II,S,P.W, equation represents a contract term for coal sales. 2) The "i" factor in the II.S.P,W, equation is a discount rate set at the prime lending rate. 3) Calculations are based on information known as of November 1, 1984. To aid in understanding of the methodoloyy, the followiny theoretical sample calculation is presented: SAMPLE CALCULATIONS Assumptions - Existiny truckiny cost = 50.50/ton - Road maintenance costs 5300,000.00/10 years - Annual production is 1,000,000 tons/year 4