Instructor's Manual to Accompany Project Management for Engineering and Construction 2nd Edition by Oberlender

Exercise 2

The cost estimate of a project is $3.5 million. Annual costs for maintaining and operating the facility are forecast as $250,000 per year. After 8 years, it is anticipated the facility will be sold for $2.0 million. If the owner requires a 15% return on his or her investment, what net annual income must be received to recover the capital investment of the project