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The city of Potatosville is considering two options for an amusement park at the heart of the city. The cost estimates for these options are:

The city of Potatosville is considering two options for an amusement park at the heart of the city. The cost estimates for these options are:

Description | Project A | Project B

Initial Cost | $5,000,000 | $6,000,000

Annual Operating Cost | $300,000/yr | $350,000/yr

Overhaul at the End of Years 2 & 4 | -- | $60,000

Overhaul at the End of Year 5 | $120,000 | --

Salvage Value | $200,000 | $250,000

Project Life | 8 years | 6 years

MARR | 10% | 10%

a) Calculate the EUAC of Project A

b) Calculate the EUAC of Project B

c) Which alternative should be selected? Why?

d) If the city expects 200,000 tourists to visit the park every year, what should the minimum ticket price be per visitor?

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