A Dade County engineer project has received cost and revenue estimates for new convention and convention centers. He has asked you to perform a capitalized cost analysis of 6% per annum. A more economical plan?
Plan 1: Initial cost of $ 40 million with expansion worth $ 8,000,000 for 10 years from now. AOC of $ 250,000 per year. expectations of net income: $ 190,000 the first year increases $ 20,000 per year for 4 additional years and then leveling off until 10 years; $ 350,000 in the year 11 and beyond.
Plan 2: The initial cost of $ 42 million with AOC $ 300,000 per year. expectations of net income: $ 260,000 the first year increased $ 30,000 per year for an additional 6 years and then leveled off at $ 440,000 in the 8th and later.