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A government agency is planning a new office building close to its current headquarters. Four proposed sites are to be evaluated. Any of these sites will have save the agency $700,000 per year, since two of its current satellite offices will no longer need to be rented. The agency uses a 6% interest rate and assumes that the building and its benefits will last for 40 years. Based on a benefit-cost analysis what should the agency do?

A B C D

Initial Cost $8.6M $8.1M $7.5M $6.8M

Annual O&M 0.12M 0.155M 0.2M 0.3M

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92262118

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