We are planning on building a new basketball complex in the midcoastregion (I wish). Each of the two following alternatives will last 18 years (so their lives match), and the interest rate is 7%. In this problem and the next, calculate the present worth of each alternative, assuming an interest rate of 7%. For this problem, calculate the present worth of Alternative A - note that construction costs are a one-time thing, whereas O&M are ANNUAL costs.Also note - your answer should be negative.

ConstructionAnnual

CostO&M

Option A$500,000$25,000

Option B$640,000$10,000