An investor is considering buying some land for $100,000 and constructing an office building on it. Three
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An investor is considering buying some land for $100,000 and constructing an office building on it. Three different buildings are being analyzed.
*Resale value to be considered a reduction in cost, rather than a benefit. Using benefit-cost ratio analysis and an 8% MARR, determine which alternative, if any, should be selected.
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Building Height 2 Stories 5 Stories 10 Stories Cost of building $400,000 $800,000 $2,100,000 (Excluding cost of land) 400,000 Resale value* of land 200,000 300,000 and building at end 20-year analysis period Annual rental income 70,000 105,000 256,000 after all operating expenses have been deducted
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2 Stories 5 Stories 10 Stories Cost including land 500000 900000 2200000 Annual Income A 700...View the full answer
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