Answered: The owner of a downtown parking lot has…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The owner of a downtown parking lot has employed a civil engineering consulting
firm to advise her on the economic feasibility of constructing an office building on
the site. The project engineer has assembled the following data:

The analysis period is to be 15 years. At the end of that time the salvage value
is expected to be equal to the initial investment.
MARR is 10%. What should the engineer recommend?

8-33(b)
The owner of a downtown parking lot has employed a civil engineering consulting
firm to advise her on the economic feasibility of constructing an office building on
the site. The project engineer has assembled the following data:
Alternative
Total
Investment
Net Annual Revenue
Sell parking lot
$
$
$
$
Keep parking lot
Build 1-story building
Build 2-story building
Build 3-story building
Build 4-story building
Build 5-story building
200,000
22,000
$
400,000
60,000
$
$
$
$
555,000
72,000
750,000
100,000
$
105,000
120,000
875,000
$
1,000,000
The analysis period is to be 15 years. At the end of that time the salvage value
is expected to be equal to the initial investment.
MARR is 10%. What should the engineer recommend?

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