Assume that Walmart Inc. has decided to surface and maintain for $10$ years a vacant lot next to one of its stores to serve as a parking

lot for customers. Management is considering the following bids involving two different qualities of surfacing for a parking area of

$11,200$ square yards.

Bid A: A surface that costs $$5\mathrm{.}75$ per square yard to install. This surface will have to be replaced at the end of $5$ years. The annual

maintenance cost on this surface is estimated at $25$ cents per square yard for each year except the last year of its service. The

replacement surface will be similar to the initial surface.

Bid B: A surface that costs $$10\mathrm{.}50$ per square yard to install. This surface has a probable useful life of $10$ years and will require annual

maintenance in each year except the last year, at an estimated cost of $10$ cents per square yard.

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Compute present value of the bids. You may assume that the cost of capital is $10\%,$ that the annual maintenance expenditures are

incurred at the end of each year, and that prices are not expected to change during the next $10$ years. $($Round factor values to $5$ decimal

places, e$.$g$.1\mathrm{.}25124$ and final answer to $0$ decimal places, e$.$g$.458,581.)$

Present value of outflows for Bid A $

Present value of outflows for Bid B $

Which bid should be accepted by Walmart.