Ongoing Project 101 and Project 204 Public projects are analyzed. Project 101 has an initial cost of $41 million and a continuing annual expense of $2.4 million thereafter. In addition, a revision and maintenance of 16 million $, which is repeated every 22 years, is required. The initial cost of project 204 is 54 million $, and a revision of 2.4 million $ is required only in 30th year. There is also a maintenance and operating expense of 1.2 million $ per year on a continuous basis. If interest = 20%, which one would you recommend to a public institution?
Ongoing Project 101 and Project 204 Public projects are analyzed. Project 101 has an initial cost of $41 million and a continuing annual expense of $2.4 million thereafter. In addition, a revision and maintenance of 16 million $, which is repeated every 22 years, is required. The initial cost of project 204 is 54 million $, and a revision of 2.4 million $ is required only in 30th year. There is also a maintenance and operating expense of 1.2 million $ per year on a continuous basis. If interest = 20%, which one would you recommend to a public institution?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Ongoing Project 101 and Project 204 Public projects are analyzed. Project 101 has an initial cost of $41 million and a continuing annual expense of $2.4 million thereafter. In addition, a revision and maintenance of 16 million $, which is repeated every 22 years, is required. The initial cost of project 204 is 54 million $, and a revision of 2.4 million $ is required only in 30th year. There is also a maintenance and operating expense of 1.2 million $ per year on a continuous basis. If interest = 20%, which one would you recommend to a public institution?
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