Estimates for a proposed small public facility are as follows: Plan A has a first costof $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expensesof $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, andannual maintenance expenses of $6,000 for the first 15 years and $1,000 per year foryears 16 through 50. Let MARR be 10% per year.(a) Find the Net Present Value, and. Net Annual Value for the two alternatives.(b) Which ones are feasible, and which one would you choose if you had to pick oneof the two? Estimates for a proposed small public facility are as follows: Plan A has a first costof $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expensesof $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, andannual maintenance expenses of $6,000 for the first 15 years and $1,000 per year foryears 16 through 50. Let MARR be 10% per year.(a) Find the Net Present Value, and.Net Annual Value for the two alternatives.(b) Which ones are feasible, and which one would you choose if you had to pick oneof the two?

Plan B:Initial cost = 90,000 (as it is)Annual cost (for first 15 years) =6000 (P/A factor for 15…

Answered: Estimates for a proposed small public…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Estimates for a proposed small public facility are as follows: Plan A has a first cost
of $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expenses
of $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, and
annual maintenance expenses of $6,000 for the first 15 years and $1,000 per year for
years 16 through 50. Let MARR be 10% per year.
(a) Find the Net Present Value, and. Net Annual Value for the two alternatives.
(b) Which ones are feasible, and which one would you choose if you had to pick one
of the two?