Question: CB Electronix needs to expand its capacity. It has two feasible alternatives under consideration. Both alternatives will have essentially infinite lives. Construct a new building

CB Electronix needs to expand its capacity. It has two feasible alternatives under consideration. Both alternatives will have essentially infinite lives. Construct a new building of 20 000 square metres now. The first cost will be $ 2 000 000. Annual maintenance costs will be S 10 000. hi addition, the building will need to be painted every 15 years (starting in 15 years) at a cost of $ 15 000. Alternative 2: Construct a new building of 12 500 square metres now and an additional 7500 square metres in 10 years. The first cost of the 12 500- square-metre building will be $ 1 250 000. The annual maintenance costs will be $ 5000 for the first 10 years (i.e., until the addition is built). The 7500- square- metre addition will have a fist cost of $ 1 000 000. Annual maintenance costs of the renovated building (the original building and the addition) will be $ 11 000. The renovated building will cost $ 15 000 to repaint every 15 years afters the addition is done).

Carry out an annual worth comparison of the two alternatives. Which is preferred if the MARR is 15 percent?

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