The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and th Park Service's MARR is 10% per year. You have been asked to compare the two plans using the present worth method. The first plan (Skyline) calls for an initial investment of $550,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline alsc requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter. The second plan (Prairie View) has an initial investment of $700,000 followed by a single (ono-time) investment of $310,000 thirty years later. Prairie View will incur annual expenses of $10,000 forever. Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N= infrity is known as "Capitalized Wort (Cw). Click the icon to view the interest and annulty table for discrete compounding when / 10% per year. The CW of the Skyline is $ thousand. (Round to the nearest whole number.) The CW of the Prairie View is s thousand. (Round to the nearest whole number) ib Which plan would you recommend? Choose the correct answer below. O Prairie View
The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and th Park Service's MARR is 10% per year. You have been asked to compare the two plans using the present worth method. The first plan (Skyline) calls for an initial investment of $550,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereafter. Skyline alsc requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter. The second plan (Prairie View) has an initial investment of $700,000 followed by a single (ono-time) investment of $310,000 thirty years later. Prairie View will incur annual expenses of $10,000 forever. Based on the present worth method, which plan would you recommend? Note that the present worth of an alternative when N= infrity is known as "Capitalized Wort (Cw). Click the icon to view the interest and annulty table for discrete compounding when / 10% per year. The CW of the Skyline is $ thousand. (Round to the nearest whole number.) The CW of the Prairie View is s thousand. (Round to the nearest whole number) ib Which plan would you recommend? Choose the correct answer below. O Prairie View
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The National Park Service is considering two plans for rejuvenating the forest and landscape of a large tract of public land. The study period is indefinitely long, and the
Park Service's MARR is 10% per year. You have been asked to compare the two plans using the present worth method.
The first plan (Skyline) calls for an initial investment of $550,000, with expenses of $25,000 per year for the first 20 years and $35,000 per year thereater. Skyline also
requires an expenditure of $200,000 twenty years after the initial investment, and this will repeat every 20 years thereafter.
The second plan (Prairie View) has an initial investment of $700,000 followed by a single (one-time) investment of $310,000 thirty years later. Prairie View will incur
annual expenses of $10,000 forever.
Based on the present worth method, which plan would you recommend? Note that the present worth of an altermative when N= infinity is known as "Capitalized Worth
(CW)".
Click the icon to view the interest and annuity table for discrete compounding when /= 10% per year.
da
The CW of the Skyline is $thousand. (Round to the nearest whole number.)
at
The CW of the Prairie View is $ thousand. (Round to the nearest whole number.)
Lib
Which plan would you recommend? Choose the correct answer
below.
O Prairie View
O Skyline
tioi
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