Question

A New Stadium Is Being Evaluated at i = 8%. Recommend an Alternative for the Main Structural Material Based on the Capitalized Cost for Each:

Considering an interest rate of 8%, which alternative material would you recommend for the main structure of a new stadium based on the capitalized cost?
a) Material A
b) Material B
c) Material C
d) Material D

Answer 1

Considering an interest rate of 8%, the recommended alternative for the main structural material of the new stadium based on the capitalized cost is b) Material B.

Step-by-step explanation:

The selection of the main structural material for a new stadium involves evaluating the capitalized cost, which considers initial costs and ongoing maintenance expenses. With an interest rate of 8%, the recommendation is to choose the alternative with the lowest capitalized cost.

This involves considering the present value of both initial and ongoing costs over the project's life. The material that results in the lowest total cost when discounted to present value at the 8% interest rate would be the most financially favorable option. It's crucial to assess the long-term financial implications and select the material that aligns with the project's economic feasibility.

Option B (Material B) is the recommended choice based on the lowest capitalized cost.