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The table below provides cash flows for two mutually exclusive alternative for developing a Pay for Recreation facility being considered by a county in Texas.
The table below provides cash flows for two mutually exclusive alternative for developing a "Pay for Recreation" facility being considered by a county in Texas. If money can be borrowed issuing bonds at the rate of 6% per year, usingthe ROR analysis, find the attractive alternative between the two given proposals.
Alternative A
Alternative B
Initial cost $10,000,000 (A)
$37,000,000 (B)
Year 1-10 yearly benefit 1,000,000 (A)
4,000,000 (B)
Yearly benefits from 11-infinity 1,500,000
Yearly benefits from 11-30 2,500,000
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