Three projects are under evaluation. Project A will cost $2 million to build and $300,000 per year to operate. Project B will cost $3.5 million to build and $200,000 a year to operate. Project C will cost $5 million to build and $100,000 a year to operate. Money costs 6 percent. Based on the Life Cycle Cost criterion, which project will you recommend if they are assumed to have infinitely long useful economic lives?
Three projects are under evaluation. Project A will cost $2 million to build and $300,000 per year to operate. Project B will cost $3.5 million to build and $200,000 a year to operate. Project C will cost $5 million to build and $100,000 a year to operate. Money costs 6 percent. Based on the Life Cycle Cost criterion, which project will you recommend if they are assumed to have infinitely long useful economic lives?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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