Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 1

Five years ago a consulting engineer purchased a building for company offi ces constructed of bricks that were not properly fi red. As a result, some of the bricks were deteriorated from their exposure to rain and snow. Because of the problem with the bricks, the selling price of the building was 25% below the price of comparable, structurally sound buildings. The engineer repaired the damaged bricks and arrested further deterioration by applying an extra-strength solvent-based RTV elastomeric sealant. This resulted in restoring the building to its fair market value. If the depressed purchase price of the building was $600,000 and the cost of getting it repaired was $25,000, what is the equivalent value of the "forced appreciation" today, if the interest rate is 8% per year