Location A would require an investrment of $3.4 million and $55,000 per ycar to maintain. Location B would cost $4.8 million to construct. The operating cost of location B will be $43,000 per year. The benefits will be $550,000 per year at location A and 5750000 at location B The disbenefits associated with each location are $35,000 per year for location A and $45,000 per year for location B. Assame the hospital will be maintained indefinitely Use an interest rate of 12% per year to determine which location, if either, should be selected on the basis of the BC method.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Two locations are considered for a new public small hospital. Location A would require an investrment of $3.4 million and $55,000 per ycar to maintain. Location B would cost $4.8 million to construct. The operating cost of location B will be $43,000 per year. The benefits will be $550,000 per year at location A and 5750000 at location B The disbenefits associated with each location are $35,000 per year for location A and $45,000 per year for location B. Assame the hospital will be maintained indefinitely Use an interest rate of 12% per year to determine which location, if either, should be selected on the basis of the BC method.
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