You have a farm & chalet in Zahban that you are planning to sell. The farm...
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You have a farm & chalet in Zahban that you are planning to sell. The farm & chalet is located far away from the city and there is no direct road to reach it. Thus, you decided to construct a new road to ease the transportation from/to the challet. The cost of constructing a new road is expected to be $1,000,000. Building the new road will increase the farm & chalet value by 300%. The annual maintenance for this road is expected to be $50,000 per year. If the current market value of the farm & chalet is $1,000,000 Using an interest rate of 5% per year compounded and a 20-year study period. Should the new road be constructed? (hint: calculate B/C ratio) You have a farm & chalet in Zahban that you are planning to sell. The farm & chalet is located far away from the city and there is no direct road to reach it. Thus, you decided to construct a new road to ease the transportation from/to the challet. The cost of constructing a new road is expected to be $1,000,000. Building the new road will increase the farm & chalet value by 300%. The annual maintenance for this road is expected to be $50,000 per year. If the current market value of the farm & chalet is $1,000,000 Using an interest rate of 5% per year compounded and a 20-year study period. Should the new road be constructed? (hint: calculate B/C ratio)
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Data provided Cost of constructing road1000000 Annual ma... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas
Posted Date:
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