Determine whether new parking structure should constructed

Reference no: EM131016974

Owing to perennial complaints about the lack of parking on campus, Wayne State is considering building a new parking structure. The structure will have to pay for itself from parking fees over a 15-year period. Given the data below, determine whether the new parking structure should be constructed at all, and if so, how many levels it should have. Use benefit-cost ratio analysis, and assume an interest rate of 6% per year.

Number of Levels	1	2	3	4
Initial Construction Costs	$750,000	1,800,000	3,000,000	3,800,000
Annual Operating Costs	$45,000	65,000	80,000	90,000
Annual Income	$120,000	290,000	375,000	550,000

Reference no: EM131016974

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