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Question & Answer: Today a proposed community college is estimated to cost ​$34.2 ​million, which is…..

Today a proposed community college is estimated to cost ​$34.2 ​million, which is ​$133 per square foot of space multiplied by 257,350 square feet. If construction costs are expected to increase by 11​% per year because of high demand for construction labor and​ materials, how much would a 326,000​-square-foot community college cost seven years from​ now? The cost capacity factor is 1.01

Expert Answer

Answer

First calculate present cost of 326,000 ft. community college as shown below: cost of 326,00ft college 326,000 cost of 257,350ft college 257,350 cost of 326,00ft college 326,000 cost of 326,00ft college 1.27x 34.2 1.01 S34.2 million 257,350 $43.43 million Present cost $133 per square foot Cost after 7 years 133(1+0.11) $276.12 per foot Now calculate cost of 326,000ft college after 7 years as follow: cost-1$43.43 million 276.12 133 $89.89 million Therefore, cost of 326,000ft college after 7 years is $89.89 million.

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