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  1. business
  2. accounting
  3. alpha beta gamma 1. initial cost ($) $1,000,000

ALPHA BETA GAMMA 1. Initial Cost ($) $1,000,000 1,200,000 1,500,000 2....

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Accounting

ALPHA BETA GAMMA
1. Initial Cost ($) $1,000,000 1,200,000 1,500,000
2. Revenues ($) $540,000 annually $565,000 at EOY1 decreasing by $5,000 annually thereafter. $575,000 from EOY1 to EOY5 inclusively; $580,000 at EOY6 which decreases by 2% annually thereafter
3. Operating Costs ($) $260,000 at EOY1 increasing by $2,500 annually thereafter. $230,000 at EOY1 increasing by 1% annually thereafter $291,000 at EOY1 increasing by $2,000 annually thereafter
4. End-of-life salvage value ($) 200,000 235,000 260,000
5. Useful life (years) 5 years 5 years 10 years

All parameter values are fictitious. EOY = End-of-year The industry standard for retirement homes is 4 years. MARR = 10%

a. The best retirement home based on the simple payback method is

b. The best retirement home based on the discounted payback method is

c. BETAs benefit/cost (B/C) ratio is between

d. GAMMAs benefit/cost (B/C) ratio is between

e. The incremental B/C ratio between ALPHA and GAMMA is between

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