Remaining Time: 1 hour, 09 minutes, 26 seconds. Question Completion Status: QUESTION UB's downtown campus is still under construction but UB is already making plans for managing the anticipated increase in medical students using this campus as well as the continued move of South Campus facilities to the new campus. One of the current concerns is how to best manage the move of chemistry and biology lab space to the downtown campus. Although a total of 16 labs will be needed by the end of year 8 only eight full labs will be built immediately. University planners are now discussing how to facilitate the construction of the REMAINING 8 labs. In particular, they are trying to decide if it would be better to install all necessary support infrastructure (vents, wiring, etc.) today for all 16 labs (original 8 planned and the 8 remaining labs) and thereby reduce their future expenditures or if they should deter all infrastructure investments until each new lab is needed. The two options being considered are outlined as follows: Option 1: Spend $336,000 today to install the needed support infrastructure for future expansion efforts (8 labs) and thereby minimize the cost of constructing the labs in the future. Option 2: Defer all infrastructure developments until each new lab is constructed. The anticipated expansion schedule, and the related infrastructure costs are as follows: two labs constructed in year 2 for $157,000, three additional labs constructed in year 5 for a $180,000 and the final three labs constructed in full in year 8 for $202,000. Regardless of the option chosen, it will cost UB $7,850 to operate and maintain the installed infrastructure for EACH new lab (starting one year after the infrastructure costs are incurred). Which option should they chose and why? Assume that UB'S MARR-8% and support your choice using a net present worth approach to evaluate these investments over the 8 years of this building project. Show all of your work (type in your work) in the response section. IE 320 Formula Sheet 01272017.pdf Interest Tables.pdf TTT Arial 3(12pt) TEE S Remaining Time: 1 hour, 09 minutes, 26 seconds. Question Completion Status: QUESTION UB's downtown campus is still under construction but UB is already making plans for managing the anticipated increase in medical students using this campus as well as the continued move of South Campus facilities to the new campus. One of the current concerns is how to best manage the move of chemistry and biology lab space to the downtown campus. Although a total of 16 labs will be needed by the end of year 8 only eight full labs will be built immediately. University planners are now discussing how to facilitate the construction of the REMAINING 8 labs. In particular, they are trying to decide if it would be better to install all necessary support infrastructure (vents, wiring, etc.) today for all 16 labs (original 8 planned and the 8 remaining labs) and thereby reduce their future expenditures or if they should deter all infrastructure investments until each new lab is needed. The two options being considered are outlined as follows: Option 1: Spend $336,000 today to install the needed support infrastructure for future expansion efforts (8 labs) and thereby minimize the cost of constructing the labs in the future. Option 2: Defer all infrastructure developments until each new lab is constructed. The anticipated expansion schedule, and the related infrastructure costs are as follows: two labs constructed in year 2 for $157,000, three additional labs constructed in year 5 for a $180,000 and the final three labs constructed in full in year 8 for $202,000. Regardless of the option chosen, it will cost UB $7,850 to operate and maintain the installed infrastructure for EACH new lab (starting one year after the infrastructure costs are incurred). Which option should they chose and why? Assume that UB'S MARR-8% and support your choice using a net present worth approach to evaluate these investments over the 8 years of this building project. Show all of your work (type in your work) in the response section. IE 320 Formula Sheet 01272017.pdf Interest Tables.pdf TTT Arial 3(12pt) TEE S
