Question

The cost of a conventional controls system for a development is $4,000,000 with annual maintenance costs of $22,000. The cost of an electronic controls system is $5,500,000 with an annual maintenance of $25,000. If the electronic option is adopted, rents can be increased by 30,000 per annum, and the value of the development will be 2,000,000 higher 10 years from now, when the developer plans to sell the property. On the basis of EUAC, when the MARR of the developer is 12%, which option should be selected?



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Answer 1

Step-by-step explanation:

The cost of a conventional controls system for a development is $4,000,000 with annual maintenance costs of $22,000. The cost of an electronic controls system is $5,500,000 with an annual maintenance of $25,000. If the electronic option is adopted, rents can be increased by 30,000 per annum, and the value of the development will be 2,000,000 higher 10 years from now, when the developer plans to sell the property. On the basis of EUAC, when the MARR of the developer is 12%, which option should be selected