The town council of Cato Springs is considering two alternative investments to upgrade and expand its spring-fed recreational area.The two investment alternatives (A and B) have different costs and will produce different public benefits. The projected costs andbenefits over a 10-year planning horizon for the two alternatives are given below. Using a MARR of 7.0%, which, if either, of thealternatives should be pursued by the Cato Springs city council?CF (Benefits for AltA)CF (Benefits for AltEOYCF (Costs for Alt A)CF (Costs for Alt B)B)$7,590,000$10,310,0001$2,240,000$1,400,000$3,360,000$2,200,000$400,000$2,596,000$600,000$3,755,000$600,000$3,003,600$800,000$4,056,6004$800,000$3,446,100$1,000,000$4,377,3005$1,000,000$3,651,400$1,200,000$4,624,800$1,200,000$3,876,600$1,400,000$4,949,8007$1,400,000$4,135,700$1,600,000$5,365,6008$1,600,000$4,506,400$1,800,000$5,649,6009$1,800,000$5,458,900$2,000,000$6,252,30010$2,000,000$6,987,400$2,200,000$10,850,200Determine and rank the present worth of the costs for the alternatives.Click here to access the TVM Factor Table calculator.Alternative A's PW(C) = $Alternative B's PW(C) = $Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is +100.has a smaller present worth of costs, so it should be denoted Alternative 1. Respectively,has ahigher present worth of costs and should be denoted Alternative 2. Assume that "Do nothing" is Alternative 0.Calculate the ratios of present worth of benefits to present worth of costs for each pair of alternatives.Incremental InvestmentIncremental B/CAlternative to be selected1-0Carry all interim calculations to 5 decimal places and then round your final answers to 3 decimal places. The tolerance is ±0.005.Based on the results above, which, if either, of the alternatives should be pursued by the Cato Springs city council?v should be recommended.2.

Given, Two Alternatives : A and B to upgrade and expand the spring fed recreational area Time…

Answered: The town council of Cato Springs is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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