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The chief ranger of the states Department of Natural Resources is considering a new plan for fighting forest fires in the states forest lands. The current plan uses eight fire-control stations, which are scattered throughout the interior of the state forest. Each station has a four-person staff, whose annual compensation totals $290,000. Other costs of operating each base amount to $190,000 per year. The equipment at each base has a current salvage value of $210,000. The buildings at these interior stations have no other use. To demolish them would cost $19,000 each. The chief ranger is considering an alternative plan, which involves four fire-control stations located on the perimeter of the state forest. Each station would require a six-person staff, with annual compensation costs of $390,000. Other operating costs would be $200,000 per base. Building each perimeter station would cost $290,000. The perimeter bases would need helicopters and other equipment costing $590,000 per station. Half of the equipment from the interior stations could be used at the perimeter stations. Therefore, only half of the equipment at the interior stations would be sold if the perimeter stations were built. The state uses a 10 percent hurdle rate for all capital projects. The chief ranger has decided to use a 15-year time period for the analysis.

Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Required:

1. Use the incremental-cost approach to prepare a net-present-value analysis of the chief rangers decision between the interior fire-control plan and the perimeter fire-control plan. (Round your "Discount factors" to 3 decimal places. Negative amounts should be indicated by a minus sign.)

Future Value and Present Value Tables able I uo$1.01 125 1.191 1 301 1.464 1.406 1.482 1.728 1.30 1.762 2488 1712 2.196 1.584 2 360 2 594 24/6 2.773 3106 1.423 5.160 1.79 2332 1.732 2 201 20 2181 200 6720 able II 1.00 Ch lows 1000 1000 100) 2.100 4779 7330 T 716 13 580 960 12 21 35 21015 23276 15 20024 271 31773 37 260 56790 1,10100 15026 154.782 057 507 767000 1,342000 7,34ag00 9058 1132 149 241.330 Table III PresentVelue of $1.00 .7317 540 "201 .305 .206 210 201 .170 157 ,S39 123 100 13 .001 A09290 229 .182 .s45 .116 093 ,001 000 040 027 Table IV 1.00 Cash Faws Period 4%6%8%10% 12% 14% 169% 14% 20% 22% 24% 2. 3 2T75 2573 2577 24E7 2A 2 2322 2245 2.174 2.100 2042 1.981 1 2 1rea 1.808 1.8 4 36) 34 6 12 170 3,037 2914 2730 2e90 2509 2494 2,404 2382 200 2201 2.166 3274 3 522 4917 43E5 4.11 ang 366 2496 3308 3167 3000 2961 2 2754 2643 6247 5 4.086 3 13 998 63 7.904 7.10 6A24 842 342 4.910 4533 4200 3012 3790 3666 2427 3220 9818 8S1 4) 19. 15.0 6 11 925 779 8244 7105 62a4 5546 4.997 4564 4168 3999 3.ses a571 3.333

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