Determine capitalized cost of facilities improvement project

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Reference no: EM131204844

University needs your help in doing some economic analysis for a facilities improvement project. The initial construction cost is $10,000,000. Routine maintenance cost is expected to be $200,000 per year. Based on the estimated usage of the facilities, University has determined that $1,000,000 will be needed every 10 years for major maintenance of the buildings in addition to the routine maintenance. MARR is 10% per year compounded annually. (DO NOT USE EXCEL)

a) University would like to cover all maintenance costs through the student fees it collects. Determine the annual amount that needs to be collected through student fees to cover the routine and major maintenance costs.

b) Determine the capitalized cost of this facilities improvement project.

Reference no: EM131204844

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