Park land for one of two alternative recreation projects

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A county is considering using a piece of park land for one of two alternative recreation projects. Project A would require construction costs of $2 million (year 0) and generate net benefits of $1 million per year for 10 years. (Assume the benefits are realized at the ends of years 1 through 10). Project B would require construction costs of $4 million and generate net benefits of $1 million per year for 20 years. (Assume the benefits are realized at the ends of years 1 through 20). If these figures are in real dollars, and the real discount rate is 7 percent, which project would the county select?

Reference no: EM131159456

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