Bullding Y Bulding X $8,000,000 Original investment by government agencies $12,000,000 Estimated annual maintenance costs $240,000 $180,000 Savings in annual rent now being paid to house employees $1,960,000 $1,320,000
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The U.S. government is considering building apartments for its employees
working in a foreign country and currently living in locally owned housing.
A comparison of two possible buildings indicates the following:
Assume the salvage or sale value of the apartments to be 60% of the first
investment. Use 10% and a 20-ycar study period to compute the B/C ratio on
incremental investment, and make a recommendation as to the best option. (Do not assume a do-nothing alternative.)
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