Answer:
<u>Single stage construction</u>
PW of Cost = $22,400,000 + 100,000(P/A, 4%, 25)
PW of Cost = $22,400,000 + 100,000(15.622)
PW of Cost = $22,400,000 + $1,562,200
PW of Cost = $23,962,200
<u>Tow stage construction</u>
PW of cots = $14,200,000 + $75,000(P/A, 4%, 25) + $12,600,000(P/F, 4%, 25)
PW of cost = $14,200,000 + $75,000(15.622) + $12,600,000(0.3751)
PW of cost = $14,200,000 + $1,171,650 + $4,726,260
PW of cost = $20,097,910
Conclusion: We should choose two stage construction as it has lesser Present worth of cost.
