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Question 5: The owner of a downtown parking lot has employed a civil engineering consulting firm to advise him on
the economic feasibility of constructing an office building on the site. Betty Samuels, a newly hired civil
engineer, has been assigned to make the analysis. She has assembled the following data: . Total Total Net Annual
Alternatlve .
investment“ Revenue Sell parking lot $0 $0
Keep parking lot $200,000 $22,000
Build 1—story building $400,000 $60 ,000
Build 2—story building $555 ,000 $72,000
Build 3—story building $750,000 $100 ,000
Build 4—story building $875 ,000 $105,000
Build 5—st05y building $1 ,000 ,000 $1 20 ,000 *Inclades the value of the land The analysis period is to be 15 years. For all alternatives, the property has an estimated resale (salvage)
value at the end of 15 years equal to the present total investment.
a) Construct a choice table for interest rates from 0% to 100% b) If the MARR is 10%, what recommendation should Bill make? (*hint* you may need to do an
incremental analysis to determine with alternative isfavorabie to the owner)

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a) Problem is one of neither fixed input nor fixed output. When the estimated resale value equals the present total... View the full answer

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