A Town must choose btw 2 types of bridges which will forever shorten the time and distance for taxpayers to commute. The citys MARR is 13% and the cost and benefit of each type of bridge is listed in the table below.
State the incremental rate of return between the 2 types of bridges, which one should be selected and why
|
Bridge type
|
A in millions
|
B in millions
|
|
First cost
|
350
|
515
|
|
Annual maintenance cost
|
15
|
25
|
|
Annual benefit
|
65
|
95
|