In New Zealand, the total cost of the construction a new building is 200 million. The annual benefit accrues based on the departmental basis: $20 million in store department, $30 million in office department and $50 million in recreation department. The life span for this project will last at 150 years as store department recorded half from the life span, office department half from store department and the balance goes to recreation department. For this situation, the calculation accrues at the end of the first year and by using the above information for prediction, what are the net benefits of the new building if the real discount rate is 10%?

In New Zealand, the total cost of the construction a new building is 200 million. The annual benefit accrues based on the departmental basis: $20 million in store department, $30 million in office department and $50 million in recreation department. The life span for this project will last at 150 years as store department recorded half from the life span, office department half from store department and the balance goes to recreation department. For this situation, the calculation accrues at the end of the first year and by using the above information for prediction, what are the net benefits of the new building if the real discount rate is 10%?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 1.1CE

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