Question

"The City of Cedar Rapids has received three bids to construct and operate a new automobile parking facility in its Downtown District. The three designs have different costs and will have different fee structures. The costs and benefits of each design are given below in thousands of dollars. Design 1 - Cost of site = $215 - Cost of building = $1700 - Annual fee collection = $767 - Annual maintenance cost = $445 Design 2 - Cost of site = $285 - Cost of building = $1200 - Annual fee collection = $935 - Annual maintenance cost = $458 Design 3 - Cost of site = $260 - Cost of building = $800 - Annual fee collection = $703 - Annual maintenance cost = $352 The cost of building and cost of site are one-time costs to be paid immediately. The city's interest rate is 8.1%, and the life of the project is 25 years. If the three designs are mutually exclusive, which design is the best alternative? You can use incremental benefit-cost ratios or present worth calculations. Enter 1, 2, or 3 as your answer."