Reference no: EM133044156

Question - Upper Arlington, a suburb of Columbus, has been conducting a multi-year phased renovation to one of its three community pools. The table shows the planned expenditures by year. The community Enterprise Fund is used to separate revenues from "business-like" activities from other revenues (e.g. various taxes). The Enterprise Fund collects $252,809 in pool membership charges in the first year. In the second year, the Fund collects 10% more as the facility improvements attract more swimmers. Each year immediately following a phase of the improvement sees a 10% increase in revenues over the previous year.

a) Beginning in year 1, show a table of the discounted revenues and expenditures for each year. Assume the discount rate is 5.655%.

b) What is the Net Present Value at the end of 10 years?

c) How would you respond if you overhear someone say, "This is an easy decision! After only a decade the benefits outweigh the costs by $711,399."