The chief ranger of the state’s Department of Natural Resourcesis considering a new plan for fighting forest fires in the state’sforest 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 compensationtotals $270,000. Other costs of operating each base amount to$170,000 per year. The equipment at each base has a current salvagevalue of $190,000. The buildings at these interior stations have noother use. To demolish them would cost $17,000 each.

The chief ranger is considering an alternative plan, which involvesfour fire-control stations located on the perimeter of the stateforest. Each station would require a six-person staff, with annualcompensation costs of $370,000. Other operating costs would be$180,000 per base. Building each perimeter station would cost$270,000. The perimeter bases would need helicopters and otherequipment costing $570,000 per station. Half of the equipment fromthe interior stations could be used at the perimeter stations.Therefore, only half of the equipment at the interior stationswould 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 theanalysis.

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

Required:

1. Use the incremental-cost approach to prepare a net-present-valueanalysis of the chief ranger’s decision between the interiorfire-control plan and the perimeter fire-control plan. (Round your"Discount factors" to 3 decimal places. Negative amounts should beindicated by a minus sign.)