A city is considering buying a piece of land for $500,000 and constructing an office complex on it. Their planning horizon is 20 years. Three mutually exclusive building designs (shown below) have been drawn up by an architectural firm. Use the PW method and a MARR of 10% per year to determine which alternative, if any, should be recommended to the city council. Cost of the building, including cost of the land Resale value of land and building at end of 20-year planning horizon Annual net rental income (after deducting all operating expenses) Design A Design B Design.co $1,300,000 $1,700,000 $3,500,000 $500,000 $900,000 $2,000,000 $120,000 $300,000 $450,000

A city is considering buying a piece of land for $500,000 and constructing an office complex on it. Their planning horizon is 20 years. Three mutually exclusive building designs (shown below) have been drawn up by an architectural firm. Use the PW method and a MARR of 10% per year to determine which alternative, if any, should be recommended to the city council. Cost of the building, including cost of the land Resale value of land and building at end of 20-year planning horizon Annual net rental income (after deducting all operating expenses) Design A Design B Design.co $1,300,000 $1,700,000 $3,500,000 $500,000 $900,000 $2,000,000 $120,000 $300,000 $450,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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