The U.S. government is considering building apartments for government employees working in a foreign country and living in locally owned housing. A comparison of two possible buildings is given in Table P16.9.
TABLE P16.9

Assume the salvage or sale value of the apartments to be 60% of the first investment. Use 10% and a 20-year study period to compute the B/C ratio on incremental investment, and make a recommendation. (Assume no do-nothing alternative.)

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Building X Building Y Original investment by government agencies $8,000,000 $12,000,000 Estimated annual maintenance costs 240,000 180,000 Savings in annual rent now being paid to house employees 1.960,000 1,320.000