The municipal golf course has made a budget request to remodel and upgrade the

clubhouse. The project will cost $7,200,000, based on reliable estimates. The additional annual

operating expenses after the upgrade are expected to be $200,000 per year. An analysis of the

experiences of other municipal golf courses reveal an expected revenue increase of $1 million

per year after the upgrade. The useful life of the upgraded clubhouse is estimated at 9 years, and

the golf course expects to get a loan for the renovations at an interest rate of 4.25%. Should the

renovations be approved.