Hospitality Enterprises is planning to build a new 112 room inn in Martin. The initial cost of land leases and construction is anticipated to be $3.4 million. The annual operating and maintenance costs are expected to average $25,000 for the 20-year life of the inn. Every 4 years the interior of the inn must be painted at a cost of $15,000. The exterior must be painted and refurbished every 5 years at a cost of $60,000. The carpet and fur- niture must be replaced every 6 years at a cost of $100,000. Every 8 years $80,000 will be spent on paving and striping the parking areas. The inn will have a net demolition cost of $100,000 at the end of its life. If the MARR for Hospitality is 5%, determine the EUAC for the inn. Contributed by Ed Wheeler, University of Tennessee at Martin

Hospitality Enterprises is planning to build a new 112 room inn in Martin. The initial cost of land leases and construction is anticipated to be $3.4 million. The annual operating and maintenance costs are expected to average $25,000 for the 20-year life of the inn. Every 4 years the interior of the inn must be painted at a cost of $15,000. The exterior must be painted and refurbished every 5 years at a cost of $60,000. The carpet and fur- niture must be replaced every 6 years at a cost of $100,000. Every 8 years $80,000 will be spent on paving and striping the parking areas. The inn will have a net demolition cost of $100,000 at the end of its life. If the MARR for Hospitality is 5%, determine the EUAC for the inn. Contributed by Ed Wheeler, University of Tennessee at Martin

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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