a) Using PW, calculate the B/C Ratios of 3 building designs

b) Conduct an incremental B/C analysis

c) Based on your analysis, which alternative should be selected?

4.1 The Daily Planet, a prime retail company, is considering buying new land in Smallville for $900,000 to build a high tech distribution center on it. Three different buildings are being analyzed. Building Size 2 acres 4 acres 7 acres Initial Cost (excludes land) $ 750,000 $ 860,000 $ 920,000 Resale value of land + buildings 1,600,000 $ 2,592,000 $2,096,000 after 20-year horizon Annual net income S 150,000S 250,000 $ 225,000 * Resale value considered a reduction in cost, not a benefit. Using benefit-cost ratio analysis and an 16% MARR, determine which alternative, if any, should be selected