Estimates for a proposed small public facility are as follows: Plan A has a first cost of $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expenses of $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, and annual maintenance expenses of $6,000 for the first 15 years and $1,000 per year for years 16 through 50. Let MARR be 10% per year. (a) Find the Net Present Value, and.Net Annual Value for the two alternatives. (b) Which ones are feasible, and which one would you choose if you had to pick one of the two?
Estimates for a proposed small public facility are as follows: Plan A has a first cost of $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expenses of $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, and annual maintenance expenses of $6,000 for the first 15 years and $1,000 per year for years 16 through 50. Let MARR be 10% per year. (a) Find the Net Present Value, and.Net Annual Value for the two alternatives. (b) Which ones are feasible, and which one would you choose if you had to pick one of the two?
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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Estimates for a proposed small public facility are as follows: Plan A has a first cost
of $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expenses
of $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, and
annual maintenance expenses of $6,000 for the first 15 years and $1,000 per year for
years 16 through 50. Let MARR be 10% per year.
(a) Find the
(b) Which ones are feasible, and which one would you choose if you had to pick one
of the two?
Transcribed Image Text:Estimates for a proposed small public facility are as follows: Plan A has a first cost
of $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expenses
of $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, and
annual maintenance expenses of $6,000 for the first 15 years and $1,000 per year for
years 16 through 50. Let MARR be 10% per year.
(a) Find the Net Present Value, and.Net Annual Value for the two alternatives.
(b) Which ones are feasible, and which one would you choose if you had to pick one
of the two?
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