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A company is building two small additions onto its headquarters In order to maximize its...

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Accounting

A company is building two small additions onto its headquarters In order to maximize its operating efficiency. The additions, which total 27.000 square meter will attach to the east and south sides of its existing $66,000-square-meter headquarters.

The construction costs are estimated to be $40 per square meter. The company estimates $60,000 per year in fixed costs and $3 pert square meter In variable cost for additional facility

The market value of the additions is expected to be 33% of the construction costs at the end of 20 years. Determine the capital recovery cost, if the minimum attractive rate of return is 4 per year.

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