Two bids have been receive to repave a commercial parking lot. Proposal 1 includes new curbs, grading
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- 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?
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
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