Business, 21.03.2020 09:13 nathang444

Allen Auto Group owns corner property that can be a parking lot for customers or sold for retail sales space. The parking lot option can use concrete or asphalt. Concrete will cost $375,000 initially, last for 20 years, and have an estimated annual maintenance cost of $200 starting at the end of the eighth year. Asphalt is cheaper to install at $250,000, but it will last 10 years and cost $2500 per year to maintain starting at the end of the second year. If asphalt is replaced after 10 years, the $2500 maintenance cost will be expended in its last year. There are no salvage values to be considered. Use i = 8% per year and PW analysis to select the more economic surface, provided the property is (a) used as a parking lot for 20 years, and (b) sold after 5 years and the parking lot is completely removed.

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