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Business, 23.10.2019 19:20 isaiaspineda09pe6ljq

Atown’s recreation department is trying to decide how to use a piece of land. one option 2 is to put up basketball courts with an expected life of 5 years. another is to install a swimming pool with an expected life of 20 years. the basketball court would cost $200,000 to construct and yield net benefits of $40,000 at the end of each year, for 5 years. the swimming pool would cost $3 million to construct and yield net benefits of $250,000 at the end of each year, for 20 years. each project is assumed to have zero salvage value at the end of its life. using a real discount rate of 5 percent, which project offers larger net benefits? approach the problem using the roll-over and the equivalent annual net benefit method

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Atown’s recreation department is trying to decide how to use a piece of land. one option 2 is to put...
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