The owner of a downtown parking lot has employed a civil engineering consulting firm to advise him on the economic feasibility of constructing an office building on the site. Bill Samuels, a newly hired civil engineer, has been assigned to make the analysis. He has assembled the following data:

*Includes the value of the land.

The analysis period is to be 15 years. For all alternatives, the property has an estimated resale (salvage) value at the end of 15 years equal to the present total investment. If the MARR is 10%, what recommendation should Bill make?            

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Total Total Net Annual Altemative Investment- Revenue from Property $O S. O Sell parking lot 200,000 22,000 Keep parking lot Build I-story building 400,000 60,000 Build 2-story building 555,000 72,000 Build 3-story building 750,000 100,000 Build 4-story building 105,000 875,000 Build 5-story building 1,000,000 120,000