A project manager received two proposals from a contractor to improve the staff parking area at...

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A project manager received two proposals from a contractor to improve the staff parking area at AGR Industries. Proposal A includes filling, grad- ing, and paving at an initial cost of $50,000. The life of the parking lot constructed in this manner is expected to be 4 years, with an annual cost for maintenance and repainting of strips at $3000. Proposal B provides a higher-quality pavement with an expected life of 12 years. The annual maintenance cost will be negligible, but the mark- ings will have to be repainted in year 6 at a cost of $5000. If the MARR is 12% per year, determine the amount AGR can spend on proposal B for the two to just break even. A project manager received two proposals from a contractor to improve the staff parking area at AGR Industries. Proposal A includes filling, grad- ing, and paving at an initial cost of $50,000. The life of the parking lot constructed in this manner is expected to be 4 years, with an annual cost for maintenance and repainting of strips at $3000. Proposal B provides a higher-quality pavement with an expected life of 12 years. The annual maintenance cost will be negligible, but the mark- ings will have to be repainted in year 6 at a cost of $5000. If the MARR is 12% per year, determine the amount AGR can spend on proposal B for the two to just break even.

Answer rating: 100% (QA)

Solution Proposal A A B C D BC PV D112A Year Initial Cost Annual Maintenanc... View the full answer