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The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided
The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided below. Parameters Apex Tops Perfect 1. Initial Cost ($) $500,000 550,000 585,000 $350,000 at EOY1 $360,000 at $400,000 2. Revenues ($) decreasing by 1% EOY1 increasing annually by 2% annually annually thereafter thereafter $275,000 at $232,000 at $210,000 at EOY1 EOY1 increasing EOY1 3. Operating increasing by by $4,000 Costs $5,000 annually decreasing by annually 1.5% annually ($) thereafter. thereafter thereafter 4. End-of-life salvage value $120,000 95,000 -30,000 ($) 5. Useful life 5 years 5 years (years) All parameter values are fictitious. EOY = End-of-year Industry Standard = 4 years MARR = 10% 10 years . . 1. Top's Net Future Worth (NEW) at EOY10. 2. Apex's NFW at EOY5. 3. Top's NPW. 4. Apex's Annual Equivalent Worth (AEW)
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