Renovation expensei $4,000,000 while the new building $6,000,000. The old building have more expensive even has been renovated for energy cost $200,000/years compared with the new building of energy cost. Residual value the old building of $500,000 and the new building of $1,000,000. If management X decided to build new buildings so the old building can be sell before renovation of $250,000. rate of return 12%.

You can evaluations for alternative proposal investment which one to choose renovation the old building or build a new building.

1. For the old building has been renovated and the new building have economic age 20 years

2.If economic age for the new building have 20 years with residual value $1,000,000 and while the old building have economic age 15 years with residual value $600,000.
Repair/replacement decisions.