The city is considering whether to spend $300,000 on a building addition this year. However, the City Council is debating whether it makes more sense to spend the $300,000 now or whether it makes more sense to wait four years when the expected cost for the addition would be $500,000. You have been asked to provide a fiscal analysis that provides support for which would be the best choice. You assume a 10-percent discount rate. What is your recommendation to the council?
A.You recommend to the City Council that they not proceed with the addition now as the future value of the funds would exceed the expected cost of the addition in four years.
B.You recommend to the City Council that they not proceed with the addition now as the future value of the funds would not exceed the expected cost of the addition in four years.
C.You recommend to the City Council that they proceed with the addition now as the future value of the funds would exceed the expected cost of the addition in four years.
D.You recommend to the City Council that they proceed with the addition now as the future value of the funds would not exceed the expected cost of the addition in four years.