A city tnat operates automobile parking facilities is evaluating a proposal to erect and operate astructure for parking in its downtown area. Three designs for a facility to be built on availablesites have been identified as follows, where all dollar figures are in thousands:Design A Design B Design CCost of site$240$180$200Cost of building$2,200$700$1,400Annual fee collection$830$750$600Annual maintenance cost$410$360$310Service life30 years30 years30 yearsAt the end of the estimated service life, the selected facility would be torn down and the landwould be sold. It is estimated that the proceeds from the resale of the land will be equal to thecost of clearing the site. If the city's interest rate is known to be 10%, which design alternativewould be selected on the basis of the benefit-cost criterion?

A city tnat operates automobile parking facilities is evaluating a proposal to erect and operate a structure for parking in its downtown area. Three designs for a facility to be built on available sites have been identified as follows, where all dollar figures are in thousands: Design A Design B Deslgn C Cost of site $240 $180 $200 Cost of building Annual fee collection $2,200 $700 $1,400 $830 $750 $600 Annual maintenance cost $410 $360 $310 Service life 30 years 30 years 30 years At the end of the estimated service life, the selected facility would be torn down and the land would be sold. It is estimated that the proceeds from the resale of the land will be equal to the cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative would be selected on the basis of the benefit-cost criterion?

A city tnat operates automobile parking facilities is evaluating a proposal to erect and operate a structure for parking in its downtown area. Three designs for a facility to be built on available sites have been identified as follows, where all dollar figures are in thousands: Design A Design B Deslgn C Cost of site $240 $180 $200 Cost of building Annual fee collection $2,200 $700 $1,400 $830 $750 $600 Annual maintenance cost $410 $360 $310 Service life 30 years 30 years 30 years At the end of the estimated service life, the selected facility would be torn down and the land would be sold. It is estimated that the proceeds from the resale of the land will be equal to the cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative would be selected on the basis of the benefit-cost criterion?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Question

A city tnat operates automobile parking facilities is evaluating a proposal to erect and operate a
structure for parking in its downtown area. Three designs for a facility to be built on available
sites have been identified as follows, where all dollar figures are in thousands:
Design A Design B Design C
Cost of site
$240
$180
$200
Cost of building
$2,200
$700
$1,400
Annual fee collection
$830
$750
$600
Annual maintenance cost
$410
$360
$310
Service life
30 years
30 years
30 years
At the end of the estimated service life, the selected facility would be torn down and the land
would be sold. It is estimated that the proceeds from the resale of the land will be equal to the
cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative
would be selected on the basis of the benefit-cost criterion?

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