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You're tasked with selecting an appropriate interest rate for a construction project. This rate will be crucial for financial assessments involving two construction methodologies. Your
You're tasked with selecting an appropriate interest rate for a construction project. This rate will be crucial for financial assessments involving two construction methodologies. Your goal is to determine the preferred methodology based on Breakeven Analysis, Return on Investment ROI and Net Present Value NPVcalculationsTwo Options for Construction Methodologies:Option : Traditional Construction ApproachInitial Costs: $ for raw materials and equipment in the first year; $ for customization and additional labor costs. There will be an ongoing annual maintenance cost of for the project's duration.Expected Outcome: A reduction in labor expenses by $ per year due to increased efficiency in construction processes.Option : Modern Prefabrication MethodInitial Costs: $ for prefabricated materials, assembly, and specialized equipment spread over the first two years. Maintenance expenses are expected to be $ annually for the first three years.Expected Outcome: A decrease in construction time leading to a reduced labor requirement, resulting in $ savings per year.Both options anticipate an increase in project scale by annually, starting from the current $ million project value.Assuming a fiveyear project duration, select an interest rate to proceed with your calculations and then determine the recommended construction methodology based on the Total Cost of Ownership TCO for each option.Remember to consider the projected increase in project scale when assessing the financial viability of each Pls add equations to the anwser not just a explanation
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