Computing the annual present value cost of maintenance

Reference no: EM1310290

1) National Guard Armory Rehabilitation

Utilize net present value methodology when making cost-benefit analysis to estimate the following project:

State of Massachusetts would like to replace the National Guard armory quickly reaching end of its service life. 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 armory’s service life by fifteen years.

i) Compute the discount factor for each year (use 4% discount rate @ 15 years)

ii) Compute the annual present value cost of maintenance (15 years)

iii) Compute discounted benefit of rehabilitating the armory

2) Provided discounted cost of rehabilitation, determine the cost- benefit ratio for proposal? Make sure to comprise information regarding following items when carrying out your evaluation of project:

i) The objectives of the project
ii) The demand and consumer surplus of the project
iii) A categorization of the project expenses
iv) An estimation of potential delays

Reference no: EM1310290

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