By what time would additional two stories have to be built

Assignment Help Econometrics

Reference no: EM13201941

In planning a small two-story office building, the architect has submitted two designs. The first provides foundation and structural details so that two additional stories can be added to the required initial two stories at a later date and without modifications to the original structure. This building would cost $1,400,000. The second design, without such provisions, would cost only $1,250,000. If the first plan is adopted, an additional two stories could be added at a later date at a cost of $850,000. If the second plan is adopted, however, considerable strengthening and reconstruction would be required, which would add $300,000 to the cost of a two-story addition. Assuming that the building is expected to be needed for 75 years, by what time would the additional two stories have to be built to make the adoption of the first design justified? MARR is 10% per year.

Reference no: EM13201941

Questions Cloud

Do you think the household is ambiguous : Describe how a budget constraint of a house hold in a two-period model is affected by each of the following changes. In each case, do you think the household is better off , or worse off, or is it ambiguous.

Why household decides not to borrow or lend at all : Assume that the price of the good is $1 in both periods. Suppose that the household decides to consume 26,000 in period 1 and 32, 000 in period 2. Now suppose that the interest rate falls to 50%, and the household decides not to borrow or lend at ..

Find changes in federal funds rate trigger a chain of events : Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including em..

What irr will be earned on the purchased of the machine : An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned to the factory for major repairs after three years of operation. These repairs cost $5,000.

By what time would additional two stories have to be built : The first provides foundation and structural details so that two additional stories can be added to the required initial two stories at a later date and without modifications to the original structure. by what time would the additional two stories ..

What is the maximum income : A car rental agency rents 220 cars per day at a rate of 31 dollars per day. For each 1 dollar increase in the daily rate, 5 fewer cars are rented. At what rate should the cars be rented to produce the maximum income, and what is the maximum income..

Do fields have large enough quantities of oil and gas : what are the highest and lowest payments from the writer that the beekeeper- farmer team will accept for the sixth day. Assuming that the farmer can dispose of $7 from the writer as she wishes, what range of payments will the beekeeper accept.

Estimate the maximum possible error in the calculated area : The radius of a circular disk is given as 26cm with a maximum error in measurement of 0.2cm. Use differentials to estimate the maximum possible error in the calculated area of the disk.

What is the incremental fee cash flow for the first year : Use of the equipment will require an increase in your company's net working capital of $4,000, but this $4,000 will be recovered at the end of year three. The use of the equipment will have no effect on revenues, but it is expected to save the fir..

User Account

All Pages