Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 90 years, and the sponsoring agency's MARR is 12% per year. Annua benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. A Initial cost $60,000 Annual benefits $10,000 B-C ratio 1.39 B $140,000 $20,000 1.19 .……. Alternative Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative D Inc. B-C ratio 1.23 C $59,000 $9,500 1.34 D $54,000 $8,000 1.23 Is the alternative acceptable? Yes

Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 90 years, and the sponsoring agency's MARR is 12% per year. Annua benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. A Initial cost $60,000 Annual benefits $10,000 B-C ratio 1.39 B $140,000 $20,000 1.19 .……. Alternative Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative D Inc. B-C ratio 1.23 C $59,000 $9,500 1.34 D $54,000 $8,000 1.23 Is the alternative acceptable? Yes

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to ing agency's MARR is 9% per year. Annual benefits to the public have been estimated by e shown below. Use the B-C method (incrementally) to select the best jogging track. Problem 10-17 (algorithmic) Q Initial cost Annual benefits B-C ratio A $50,000 $8,000 1.78 Alternative A Alternative B $145,000 $21,000 1.61 $55,000 $9,000 1.82 D $64,000 $10,500 1.82 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Inc. B-C ratio Is the alternative acceptable? Yes 1.78 □
Question 1 You are interested in purchasing a car from the available three options. CAR-1 CAR-2 CAR-3 First Cost 17856 23456 28678 Operating cost ($/year) Benefits ($/year) Disbenefits ($/year) Life (years) 743 589 321 435 1088 890 85 145 134 12 15 20 Use Incremental B/C analysis to determine which car is better at an interest rate of 9% per year.
7 A flood control project with a life of 16 years will require an investment of $55,000 and annual maintenance costs of $6,000. The project will provide no benefits for the first two years but will save $26,000 per year in flood damage starting in the third year. The appropriate MARR is 12% per year. What is the modified B-C ratio for the flood control project?
Using the incremental B/C analysis (AB/C). Determine the best alternative, i=10% First cost O &M Cost/year Benefit/year Salvage value Life in years A 45,000 $4,000 $15,000 $9,000 B $25,000 $1,500 $9,500 $5,000 10 с $35,000 $3,000 $14,000 $7,000 D $15,000 $2,000 $8,000 $3,000
Determine the best alternatives for a government project with the following data: PROJECT A B с ANNUAL BENEFIT P250k P320k P350k P100k P135k ANNUAL COSTS B/C RATIO 2.5 2.37 p180k 1.94
The two alternatives shown are under consideration for improving security at a facility. Determine which one should be selected, if any, based on a B/C analysis. Consider an interest rate of 7% per year and a 10-year study period. Additional information is provided in Table Q 6(b). Page 4 of 5 Table Q 6(b) Alternative 1: Extra Cameras | Alternative 2: New Sensors First cost, $ Annual O&M cost, $ 38000 87000 49000 64000 Annual benefits, $ Annual disbenefits, $ 110000 160000 26000
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Given the data for two alternatives, choose the better alternative using the B/C ratio analysis. MARR = 8% (Hint: If using EUAW, change each first cost to annual fırst then do incremental. If using PW, match the cash flows (rebuy Bottom) before subtracting.) Alternative Bottom Тop First Cost $100,000 $140.000 Operating Costs/Yr 50,000 100,000 60,000 Benefits/Yr 120,000 Maintenance/Yr 30,000 25,000 Life in years 10
IC OM B D Life/years X Z Y X $320,000 $45,000 $110,000 $20,000 10 W Y $540,000 $35,000 $150,000 $45,000 20 Based on the above ME alternatives and using the B/C analysis, which alternative we should select?i=10%. Z $300,000 $50,000 $80,000 $10,000 10 W $330,000 $20,000 $95,000 $30,000 20 V $250,000 $40,000 $90,000 $10,000 15
Using the incremental B / C analysis (AB/C). Determine the best alternative. Using the incremental rate of return (AROR) analysis. Determine the best alternative. MARR = 10%. First cost O &M Cost/year Benefit/year Salvage value Life in years A 45,000 $4,000 $15,000 $9,000 B $25,000 $1,500 $9,500 $5,000 10 C $35,000 $3,000 $14,000 $7,000 $15,000 $2,000 $8,000 $3,000
The B/C ratio for the following cash flow estimates calculated at an interest rate of 10% is .89, which means that the project is currently not justified. What would the maximum first cost be for this project to be justified? Item PW of benefits, $ AW of disbenefits, $/year First cost, $ M&O costs, $/yr Life, years Estimate 3,800,000 45,000 1,200,000 310,000 20 775,723 140,952 863,993 1,092,000
DRAW THE CASH FLOW DIAGRAM Two alternatives are being considered for a certain project. Alternative A has an initial cost of $10,000, uniform annual benefits of $3,000 and a useful life of 6 years. Alternative B has an initial cost of $20,000, uniform annual benefits of $5,000 and a useful life of 6 years. If money is worth 12% annually, determine the better alternative using modified B/C analysis.