The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and the Park Service's MARR is 9% per year. You have been asked to compare the two plans using the present worth method. The first plan (Skyline) calls for an initial investment of $450,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline also requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter. The second plan (Prairie View) has an initial investment of $750,000 followed by a single (one-time) investment of $310,000 thirty years later. Prairie View will incur annual expenses of $11,000 forever. Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N= infinily is known as "Capitalized Worth (CW)". Click the icon to view the interest and annuity table for discrete compounding when / 9% per year. The CW of the Skyline is $ 747603 thousand. (Round to the nearest whole number) The CW of the Prairie View is $972302 thousand. (Round to the nearest whole number.) Which plan would you recommend? Choose the correct answer below.
The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and the Park Service's MARR is 9% per year. You have been asked to compare the two plans using the present worth method. The first plan (Skyline) calls for an initial investment of $450,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline also requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter. The second plan (Prairie View) has an initial investment of $750,000 followed by a single (one-time) investment of $310,000 thirty years later. Prairie View will incur annual expenses of $11,000 forever. Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N= infinily is known as "Capitalized Worth (CW)". Click the icon to view the interest and annuity table for discrete compounding when / 9% per year. The CW of the Skyline is $ 747603 thousand. (Round to the nearest whole number) The CW of the Prairie View is $972302 thousand. (Round to the nearest whole number.) Which plan would you recommend? Choose the correct answer below.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and
the Park Service's MARR is 9% per year. You have been asked to compare the two plans using the present worth method.
The first plan (Skyline) calls for an initial investment of $450,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline
also requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter.
The second plan (Prairie View) has an initial investment of $750,000 followed by a single (one-time) investment of $310,000 thirty years later. Prairie View will incur
annual expenses of $11,000 forever.
Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N = infinity is known as "Capitalized
Worth (CW)".
Click the icon to view the interest and annuity table for discrete compounding when /= 9% per year.
The CW of the Skyline is $ 747603] thousand. (Round to the nearest whole number.)
The CW of the Prairie View is $972392) thousand. (Round to the nearest whole number.)
Which plan would you recommend? Choose the correct answer below.
Prairie View
Skyline](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feca42aeb-25eb-41ed-a827-c287de17b7d1%2F1342a0de-b2b4-48d5-8d11-56d20cc2e003%2Fswxs09_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and
the Park Service's MARR is 9% per year. You have been asked to compare the two plans using the present worth method.
The first plan (Skyline) calls for an initial investment of $450,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline
also requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter.
The second plan (Prairie View) has an initial investment of $750,000 followed by a single (one-time) investment of $310,000 thirty years later. Prairie View will incur
annual expenses of $11,000 forever.
Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N = infinity is known as "Capitalized
Worth (CW)".
Click the icon to view the interest and annuity table for discrete compounding when /= 9% per year.
The CW of the Skyline is $ 747603] thousand. (Round to the nearest whole number.)
The CW of the Prairie View is $972392) thousand. (Round to the nearest whole number.)
Which plan would you recommend? Choose the correct answer below.
Prairie View
Skyline
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