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What is FW of Design A, Design B, and Design C. Which alternative should be chosen. Do not round off in the solution.

What is FW of Design A, Design B, and Design C. Which alternative should be chosen. Do not round off in the solution.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 6E
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What is FW of Design A, Design B, and Design C. Which alternative should be chosen. Do not round off in the solution.
A city is considering to buy a piece of land and constructing an office complex on it. Their planning horizon is 20 years. Three mutually exclusive building designs have been drawn up by the architectural firm. Use MARR of 10% per year to determine which alternative, if any, should be recommended to the city council. Use FW Method. Cost of building + land Resale value after 20 years Annual net rental income Design A $1,300,000 $500,000 $120,000 Design B $1,700,000 $900,000 $300,000 Design C $3,500,000 $2,000,000 $450,000
Transcribed Image Text:A city is considering to buy a piece of land and constructing an office complex on it. Their planning horizon is 20 years. Three mutually exclusive building designs have been drawn up by the architectural firm. Use MARR of 10% per year to determine which alternative, if any, should be recommended to the city council. Use FW Method. Cost of building + land Resale value after 20 years Annual net rental income Design A $1,300,000 $500,000 $120,000 Design B $1,700,000 $900,000 $300,000 Design C $3,500,000 $2,000,000 $450,000
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