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The city of Kingston is considering building a new indoor swimming pool. The pool is expected to cost $6,000,000 to build and set-up. It is
The city of Kingston is considering building a new indoor swimming pool. The pool is expected to cost $6,000,000 to build and set-up. It is expected that because of the increasing demand, such a facility could bring in $650,000 in net profits yearly. The city uses a MARR of 10% and decides to study this project over a 30-year life. A. What is the Present Worth of this project? B. There is uncertainty in this project. The build and set-up costs could be as little as $5,500,000, but they could go as high as $7,500,000. The net profits can vary by +10% or -10% of the forecasted $650,000, and the MARR can vary between 7% and 11%. To which of these factors is the PW most sensitive? C. If we fix the yearly net profits at $650,000 for 30 years, how much can the city afford to spend on the pool's build and set-up to break even with a MARR of 10%
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