Adams Countys Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the boards decision appear below.

Cost of acquiring additional land for runway	$	88,500
Cost of runway construction		300,000
Cost of extending perimeter fence		10,180
Cost of runway lights		49,000
Annual cost of maintaining new runway		24,500
Annual incremental revenue from landing fees		67,500

In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $200,000. The old snowplow could be sold now for $20,000. The new, larger plow will cost $19,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $136,000 per year in additional tax revenue for the county.

In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The countys hurdle rate for capital projects is 25 percent.

3-a.	Which of the data used in the analysis are likely to be most uncertain? (Select all that apply.)
Cost of acquiring land Annual cost of maintaining new runway Annual incremental revenue from landing fees Cost of new snow plow Cost of runway lights Annual additional tax revenue Salvage value of old snow plow

3-b.	Which of the data used in the analysis are likely to be least uncertain? (Select all that apply.)

Cost of acquiring land

Annual cost of maintaining new runway

Annual incremental revenue from landing fees

Cost of new snow plow

Cost of runway lights

Annual additional tax revenue

Salvage value of old snow plow

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3.

Which of the following statements are true? (Select all that apply.)

The net-present-value method is preferable to the payback method. The payback method is preferable to the net-present-value method. The payback period criterion fails to account for the time value of money. If management uses the payback method, the investment will be approved only if the required payback period is 4.6 years or more. The cut-off value for the payback period is very much dependent on the bank's hurdle rate. The cut-off value for the payback period has nothing to do with the bank's hurdle rate.