Question

The Department of Defense uses an area cost factor (ACF) to compensate for variations in construction costs in different parts of the country and world. If a cold storage warehouse cost $1,050,000 in Rapid City, South Dakota, where the ACF is 0.91, and the cost of a similar facility built in Andros Island, The Bahamas, is $2,500,000, what is the ACF for Andros Island

Answer 1

Answer: 2.16

Step-by-step explanation:

Cost at B = Cost at A * (Cost index of B / Cost index of A)

Cost at A = $1,050,000 Rapid City

Cost at B = $2,500,000 Andros Island

Cost index at A = ACF of 0.91

Cost index at B = ?

2,500,000 = 1,050,000 * (Andros ACF / 0.91)

2,500,000 * 0.91 = 1,050,000 * Andros ACF

Andros ACF = (2,500,000 * 0.91) / 1,050,000

Andros ACF = 2.16