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a) Determine the capitalised cost of a national park which will have an initial cost of Euro 5 Million, an annual operating cost of Euro

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a) Determine the capitalised cost of a national park which will have an initial cost of Euro 5 Million, an annual operating cost of Euro 18,000 and periodic maintenance costs of Euro 120,000 every 10 years. An interest rate of 9% per annum can be assumed b) Compare the following alternatives shown below on the basis of their capitalised costs. Use an interest rate of 1% per month Table 4.1: Comparative cost of two alternatives c) Two equivalent pieces of construction machinery are being compared by a contractor for purchase: Machine A is more expensive than Machine B but has a longer life. Table 4.2: Comparative cost of two alternatives Use a return rate of 15%, determine the payback period of each option. Calculate the annualised economic worth of both options. Does the answer derived conflict with the relative payback periods for the two options? a) Determine the capitalised cost of a national park which will have an initial cost of Euro 5 Million, an annual operating cost of Euro 18,000 and periodic maintenance costs of Euro 120,000 every 10 years. An interest rate of 9% per annum can be assumed b) Compare the following alternatives shown below on the basis of their capitalised costs. Use an interest rate of 1% per month Table 4.1: Comparative cost of two alternatives c) Two equivalent pieces of construction machinery are being compared by a contractor for purchase: Machine A is more expensive than Machine B but has a longer life. Table 4.2: Comparative cost of two alternatives Use a return rate of 15%, determine the payback period of each option. Calculate the annualised economic worth of both options. Does the answer derived conflict with the relative payback periods for the two options

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