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Question: problem1 you have been placed in charge of campground development...

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PROBLEM1 You have been placed in charge of campground development for your agency. You have been asked to assess the value of two potential options using a discount rate is 3% (annual). 1a) Upgraded facilities (hookups and restrooms) will require an initial investment of $65,000 now and require maintenance costs of $1500 per year starting at the end of the first year and $23,000 every five years starting at the end of the fifth year. You expect 750 overnight visitors each year and will charge $35 per night. What is the Present Value of this plan in perpetuity? 1b) Rustic facilities (no hookups and outhouses) will require an initial investment of $15,000 now and require maintenance costs of $100 per year starting at the end of the first year an additional $3,000 every three years starting at the end of the third year. You expect 1750 overnight visitors each year and will charge $12 per night. What is the Present Value of this plan in perpetuity? 1c) Which option would you prefer?

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