5 A city is planning a new children s park Two contractors are bidding for the project Contractor A will construct the

Question

5 A city is planning a new children s park Two contractors are bidding for the project Contractor A will construct the playground for 2 500 000 and estimates annual maintenance to cost 100 000 Contractor B will construct the playground for 3 500 000 and annual maintenance will be 75 500 In both cases the contractors will maintain the park for 20 years The relevant rate of interest is 8 On the basis of NPV analysis which contractor would you recommend

Kunduz · Accepted Answer

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