Question
In: Accounting
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.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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
1,048
1,315
Resale value...
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
1,107
1,306
Resale value...
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you may want to sell in one year. As a U.S. resident, you are
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British economy booms in the future, the land will be worth £2,000
and one British pound will be worth $1.40. If the British economy
slows down, on the other hand, the land will be worth less, i.e.,
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Suppose that you hold a piece of land in the City of London that
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