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The city engineer has prepared two plans for roads in the city park Both plans meet anticipated requirements for the next 40 years The city's minimum attractive rate of return is

The city engineer has prepared two plans for roads in the city park. Both plans meet anticipated requirements for the next 40 years. The city's minimum attractive rate of return is 7% Plan A is a 3-stage development program: $300,000 is to be spent now followed by $250,000 at the end of 15 years and $300,000 at the end of 30 years. Annual maintenance will be $75,000 for the first 15 years, $125,000 for the next 15 years, and $250,000 for the final 10 years. Plan B is a 2-stage development program: $450,000 is to be spent now followed by $50,000 at the end of 15 years. Annual maintenance will be $100,000 for the first 15 years and $125,000 for the subsequent years. At the end of 40 years, this plan has a salvage value of $150,000 Use a conventional benefit-cost ratio analysis to determine which plan should be chosen

Jun 02 2020 View more View Less

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