Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

تمرين 3

The Idaho Department of Fish and Wildlife (IDFW) is considering two locations for a new state park. Location E would require an investment of $3 million and $50,000 per year to maintain. Location W would cost $7 million to construct, but the IDFW would receive an additional $25,000 per year in park fees. The operating cost of location W will be $65,000 per year. The revenue to park concessionaires will be $500,000 per year at location E and $700,000 at location W. The disbenefits associated with each location are $30,000 per year for location E and $40,000 per year for location W. Assume the park will be maintained indefinitely. Use an interest rate of 12% per year to determine which location, if either, should be selected on the basis of (a) the B/C method and (b) the modified B/C method.