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Use the net present value methodology when creating a cost-benefit analysis to evaluate the following project: The State of Massachusetts would like to replace a
Use the net present value methodology when creating a cost-benefit analysis to evaluate the following project: The State of Massachusetts would like to replace a National Guard armory rapidly reaching the end of its service life. The Department of Military Affairs has been told that continued special maintenance would be $275,000 annually. Rehabilitation of facility would cost $4,000,000, and would extend the armorys service life by 15 years. Calculate the discount factor for each year (use 4% discount rate @ 15 years) Calculate the annual present value cost of maintenance (15 years) Calculate the discounted benefit of rehabilitating the armory Given the discounted cost of rehabilitation, what is the cost- benefit ratio for the proposal? Be sure to include information regarding the following items when completing your evaluation of the project: the objectives of the project the demand and consumer surplus of the project a categorization of the project expenses an estimation of potential delays
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