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Calculate the discount factor

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Reference no: EM1332142

The State of Massachusetts would like to replace a National Guard armory rapidly reaching the end of its service life. The Department of Military Affairs has been told that continued special maintenance would be $275,000 annually. Rehabilitation of facility would cost $4,000,000, and would extend the armory?s service life by 15 years.

  • Calculate the discount factor for each year (use 4% discount rate @ 15 years)
  • Calculate the annual present value cost of maintenance (15 years)
  • Calculate the discounted benefit of rehabilitating the armory
  • Given the discounted cost of rehabilitation, what is the cost- benefit ratio for the proposal?
  • Be sure to include information regarding the following items when completing your evaluation of the project:

 

  • the objectives of the project
  • the demand and consumer surplus of the project
  • a categorization of the project expenses
  • an estimation of potential delays

Reference no: EM1332142

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