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A city is considering buying a piece of land for $500.000 and construction an office complex...

A city is considering buying a piece of land for $500.000 and construction an office complex on it. Their planning horizon is 20 years. Two mutually exclusive building designs have been drawn up by an architectural firm. Use the modified benefit cost ratio method and a MARR of 10% per year to determine which alternative should be recommended to the city council.

Design A (x1000$) Design B (x1000$)
Cost of building including cost of the land 1,192 1,320
Resale value of land and building at end of 20 year planning horizon 629 874
Annual net rental income (after deducting all operating expenses) 143 217

Perform the incremental B/C Analysis. Write the incremental B/C ratio for these alternatives.

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ekkarill92 answered 2 years ago
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