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| | ALPHA | BETA | GAMMA |
| 1. Initial Cost ($) | $1,000,000 | 1,200,000 | 1,500,000 |
| 2. Revenues ($) | $540,000 annually | $565,000 at EOY1 decreasing by $5,000 annually thereafter. | $575,000 from EOY1 to EOY5 inclusively; $580,000 at EOY6 which decreases by 2% annually thereafter |
| 3. Operating Costs ($) | $260,000 at EOY1 increasing by $2,500 annually thereafter. | $230,000 at EOY1 increasing by 1% annually thereafter | $291,000 at EOY1 increasing by $2,000 annually thereafter |
| 4. End-of-life salvage value ($) | 200,000 | 235,000 | 260,000 |
| 5. Useful life (years) | 5 years | 5 years | 10 years |
All parameter values are fictitious. EOY = End-of-year The industry standard for retirement homes is 4 years. MARR = 10%
a. The best retirement home based on the simple payback method is
b. The best retirement home based on the discounted payback method is
c. BETAs benefit/cost (B/C) ratio is between
d. GAMMAs benefit/cost (B/C) ratio is between
e. The incremental B/C ratio between ALPHA and GAMMA is between
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