Determine which uses modified benefit-cost ratio method

Reference no: EM13238878

A city is considering buying a piece of land for $500,000 and constructing an office complex on it. Their planning horizon is 20 years. Three mutually exclusive buildings have been drawn up by an architectural firm. Use the modified benefit-cost ratio method and a MARR of 10% per year to determine which alternative, if any, should be recommended to the city council. Use incremental analysis method with modified B-C ratio based on AW.
Design A Design B Design C
Cost of the building including cost of land $1,300,000 $1,700,000 $3,500,000

Resale value of land and building at end of $500,000 $900,000 $2,000,000 20-year planning horizon

Annual net rental income (after deducting all $120,000 $300,000 $450,000 operating expenses)

Reference no: EM13238878

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