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Question 5 (15 points) [15 Marks] The government is considering building apartments for public employees working in remote areas. A comparison of two possible
Question 5 (15 points) [15 Marks] The government is considering building apartments for public employees working in remote areas. A comparison of two possible apartment buildings is given in the table below: Building A Building B Building C Initial investment by the government $7,200,000 $7,500,000 $9,000,000 Estimated annual $140,000 $120,000 $110,000 O&M costs Savings in annual transportation costs currently $1,300,000 $1,400,000 $1,450,000 paid by employees The salvage values of the apartments are assumed to be 60% of the initial investment. Compute the benefit-cost ratio using a 15% interest rate and a 15-year study period. Assume there is no do-nothing alternative.
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