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A city is considering building a crafts center. After expressing outcomes in monetary terms, the city determines that the initial cost of the crafts center
A city is considering building a crafts center. After expressing outcomes in monetary terms, the city determines that the initial cost of the crafts center will be $800,000. Annual operating costs (incurred at the end of years 1, 2, 3) will be $300,000 each year. Annual benefits will be $600,000 at the end of years 1, 2 and 3. All costs and benefits will end after year 3.
At a discount rate of 8% what is the value of this center? In one sentence: Should it be built, and why?
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