Two bids have been receive to repave a commercial parking lot Proposal 1 includes new curbs, grading and paving at an initial cost of 250,000 The life of the parking lot surface constructed in this manner is expected to be 4 years with an annual cost of maintenance and repainting of pavement markings at 3,000 Proposal 2 offers pavement of a significantly higher quality with an expected life of 8 years The annual maintenance cost will be negligible for the pavement, but the markings will have to be repainted every 2 years At a cost of 3,000 Markings are not repainted the last of its expected life under proposal If the companys current MARR is 12 per year, how much can it afford to spend on proposal 2 initially so that the two breakeven

Question: Two bids have been receive to repave a commercial parking lot. Proposal 1 includes new curbs, grading and paving at an initial cost of 250,000.

Two bids have been receive to repave a commercial parking lot. Proposal 1 includes new curbs, grading and paving at an initial cost of 250,000. The life of the parking lot surface constructed in this manner is expected to be 4 years with an annual cost of maintenance and repainting of pavement markings at 3,000. Proposal 2 offers pavement of a significantly higher quality with an expected life of 8 years. The annual maintenance cost will be negligible for the pavement, but the markings will have to be repainted every 2 years. At a cost of 3,000. Markings are not repainted the last of its expected life under proposal. If the company’s current MARR is 12% per year, how much can it afford to spend on proposal 2 initially so that the two breakeven?

Step by Step Solution

★★★★★

3.47 Rating (157 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To find out how much the company can afford to spend on Proposal 2 so that the two proposals break even we need to compare their equivalent annual cos... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Civil Engineering Questions!

A project has an initial cost of $40,000, expected net cash inflows of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV?

An ice cream machine has an initial cost of $22,000. In year 4, it will require major maintenance at a cost of $4000. Each year, it is projected to generate $5,000 in net revenues for the company....

A project has an initial cost of $18,400 and produces cash inflows of $7,200, $8,900, and $7,500 over three years, respectively. What is the discounted payback period if the required rate of return...

Answer the following questions after reviewing the annual report From the Management Report and Audit Report: a) What information does the Management Report (Not MD&A) convey? b) Which audit company...

Im having trouble with question 3 part A of the attached file. I know and understand her needs but im not sure if im filling out the table correctly ? Assignment Tier 1 Financial Planning...

Activity Based Costing (ABC) Background Information: Nick's Woodworking Inc. began operations in 2023 as a manufacturer of picnic tables with attached benches. During its first decade of operations,...

I need help with the following case study of Advance Financial Managemdnt Accounting. I have added pictures of the case along with the student instruction. Please help me with step by step process if...

Hello, I need help with a homework problem due tomorrow night that I've gotten behind completing. I have attached Course Reading for the week for background information, assignment prompt, and the...

please do any other article except second one it been done already and please apply correct theory 3101AFE Accounting Theory and Practice GROUP RESEARCH ASSIGNMENT Semester 1 2016 A. OVERVIEW The...

Need ONLY an answer to Part C, step 1, questions 1 and 3. Term Project Part A: Understanding Financial Statements Locate and use an annual report STEP 1: The Company Assigned to you Find the most...

Why is it necessWhy is it necessary for state and local governments and nonprofits to submit requests for grants to gain revenue from the federal level of the government? ary for state and local...

A zinc die casting has a critical dimension of 7.500 in when it solidifies in the mold at its melting temperature because 7.500 in is the corresponding mold dimension. What is the value of this part...

One of your colleagues is planning on changing (ie. altering the numbers) his collected data to make the data "say" what he wants the data to state. His plan is to submit the abstract to a national...

Assume food delivery firms like Swiggy are making huge profits. Higher profits may attract the entry of new firms into the food delivery industry. Explain what could be the impact of entry on the...

"This problem has such a simple solution. Why are we spending so much time discussing this? I could have been finishing my work instead of wasting my time here," thought Lamar while attending a...

Time Dilation: An astronaut travels at a speed of 0.95c away from Earth. The astronaut sends a light signal back to Earth every 1.0 s, as measured by her clock. An observer on Earth notes that these...

Required: Find the duration of a bond with settlement date June 1 1 , 2 0 1 8 , and maturity date December 1 5 , 2 0 2 7 . The coupon rate of the bond is 4 % , and the bond pays coupons semiannually....

A liquid flows upward through a valve situated in a vertical pipe. Calculate the differential pressure (kPa) between points A and B. The mean velocity of the flow is 4.1 m/s. The specific gravity of...

The stock of Gao Computing sells for $50, and last year's dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. Gao's preferred stock pays a dividend of $3.30 per...

Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for...

The Verbrugge Publishing Company's 2015 balance sheet and income statement are as follows (in millions of dollars): Balance Sheet Income Statement Net sales...

Stimuli that fall below the threshold of conscious awareness are called ________ stimuli. a. encoded b. automatic c. preconscious d. subliminal

In making a large pot of chili for a family reunion, you find that you have to add 1 onion to your pot of chili that already has 5 onions mixed in it to notice a difference. According to Webers Law,...

You detect the strong smell of cedar when you enter a furniture store. However, after a short while in the store, you no longer can detect the smell. This is likely due to a. accommodation. b....