8s.3 Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city-owned lot Seating Сараcity Annual Annual Required Investment Alternative Design Benefits Costs A1 3,000 $194,000 $87,500 $800,000 A2 4,000 $224,000 $105,000 $1,000,000 The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate which of the following statements is incorrect? a. Select A1 because it has the largest B/C ratio. b. Select A1 because it has the most benefits per seating capacity. c. Select A1 because it has the largest PW. d. Select A1 because the incremental benefits generated from A2 are not large enough to offset the additional investment ($200,000 more than A1).

8s.3 Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city-owned lot Seating Сараcity Annual Annual Required Investment Alternative Design Benefits Costs A1 3,000 $194,000 $87,500 $800,000 A2 4,000 $224,000 $105,000 $1,000,000 The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate which of the following statements is incorrect? a. Select A1 because it has the largest B/C ratio. b. Select A1 because it has the most benefits per seating capacity. c. Select A1 because it has the largest PW. d. Select A1 because the incremental benefits generated from A2 are not large enough to offset the additional investment ($200,000 more than A1).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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