The Department of Defense uses area cost factors (ACFs) to compensate for differences in construc­tion costs in different parts of the country (and world). The area cost factor for Waianae, Hawaii is 2.19 and for Moody, Alabama is 0.83. If a cold-storage processing warehouse will cost $1,350,000 in Moody, Alabama, what would be the monetary difference in cost for a similar ware­house constructed in Waianae, Hawaii.

What will be an ideal response?


Cost in Hawaii = 1,350,000 (2.19/0.83) = $3,562,048

Difference = 3,562,048 - 1,350,000 = $2,212,048

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