There is a need for a parking lot within a given town. A land in a...
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There is a need for a parking lot within a given town. A land in a suitable location is available for purchase that they could pave to provide some additional parking. Based on a survey of local businesses carried out, $350,000 in additional business each year will be realized if parking is increased. The benefit to local residents based on time saved and convenience is valued at an additional $150,000 per year. The land will cost the town $800,000 and clearing, paving, signage, etc. will cost $1,000,000. The annual maintenance costs are expected to be $8000. During the construction of the lot, there will be some disruption for merchants and customers which is valued at $75,000. If the Town uses an MARR of 10% over 10 years, what is the benefit/cost ratio for this project? Should the town proceed with it? There is a need for a parking lot within a given town. A land in a suitable location is available for purchase that they could pave to provide some additional parking. Based on a survey of local businesses carried out, $350,000 in additional business each year will be realized if parking is increased. The benefit to local residents based on time saved and convenience is valued at an additional $150,000 per year. The land will cost the town $800,000 and clearing, paving, signage, etc. will cost $1,000,000. The annual maintenance costs are expected to be $8000. During the construction of the lot, there will be some disruption for merchants and customers which is valued at $75,000. If the Town uses an MARR of 10% over 10 years, what is the benefit/cost ratio for this project? Should the town proceed with it?
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To calculate the benefitcost ratio for the parking lot project we first need to calculate the total ... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
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