3. Two bids have been received to repave a commercial parking lot. Proposal 1 includes new curbs, grading, and paving at

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3 Two Bids Have Been Received To Repave A Commercial Parking Lot Proposal 1 Includes New Curbs Grading And Paving At 1 (29.65 KiB) Viewed 50 times

3. Two bids have been received to repave a commercial parking lot. Proposal 1 includes new curbs, grading, and paving at an initial cost of $250,000. The life of the parking lot surface constructed in this manner is expected to be 4 years with annual costs for maintenance and repainting of pavement markings at $3000. Proposal 2 offers pavement of a significantly higher quality with an expected life of 8 years. The annual maintenance cost will be negligible for the pavement, but the markings will have to be repainted every 2 years at a cost of $3000. Markings are not repainted the last year of its expected life under proposal 2. If the company's current MARR is 12% per year, how much can it afford to spend on proposal 2 initially so the two break even?