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The city of Garden Ridge, Florida, has received designs for a new patient room wing to the municipal hospital from two architectural consultants. One
The city of Garden Ridge, Florida, has received designs for a new patient room wing to the municipal hospital from two architectural consultants. One of the two designs must be accepted in order to announce it for construction bids. The costs and benefits are the same in most categories, but the city financial manager decided that the estimates below should be considered. determine which design to recommend at the city council meeting next week and to present to the citizenry in preparation for an upcoming bond referendum next month. Construction cost. S Building maintenance cost, Slyear Patient usage copay, S/year Design A 1 (1000.000 35.000 450.000 Design B 15.@000 55.000 21" ooo The patient usage copay is an estimate of the amount paid by patients over the insurance coverage generally allowed for a hospital room. The discount rate is 5%, and the life of the building is estimated at 30 years. a) Use incremental BIC analyrsis to select design A or B.
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