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A local city that operates automobile parking facilities is evaluating a proposal that it will erect and operate a structure for parking in the city's
A local city that operates automobile parking facilities is evaluating a proposal that it will erect and operate a structure for parking in the city's downtown area. Three designs for a facility to be built on available sites have been identified in Table P8.7 (all dollar figures are in thousands). TABLE P8.7 Design B Design A $240 Design C $200 Cost of site $180 $2,200 $700 $750 $1,400 $600 Cost of building Annual fee collection Annual maintenance cost Service life (years) $830 $410 $360 $310 30 30 30 At the end of the estimated service life, whichever facility had been constructed would be torn down, and the land would be sold. It is estimated that the pro- ceeds from the resale of the land will be equal to the cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative would be selected on the basis of the benefit-cost criterion
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