The government is considering undertaking four projects. These projects are mutually exclusive, and the estimated present worth of their costs and the present worth of their benefits are shown in millions of dollars in the table below. All of the projects have the same duration. Assuming no do-nothing alternative, which alternative would you select? Justify your choice by using a benefit-cost (BC()) analysis on incremental investment. Click the icon to view the data for the four projects. Which project(s) should be excluded from subsequent consideration? Select all that apply. A. None of the projects B. Project A2 C. Project A1 D. Project A3 E. Project A4 Fill in the table below. (Round to two decimal places.) Project A1 A2 A3 A4 Incremental Investment A4-A3 A2-A4 I BC (1) 47 1.36 2.8 1.64 BC(0) K-J

The government is considering undertaking four projects. These projects are mutually exclusive, and the estimated present worth of their costs and the present worth of their benefits are shown in millions of dollars in the table below. All of the projects have the same duration. Assuming no do-nothing alternative, which alternative would you select? Justify your choice by using a benefit-cost (BC()) analysis on incremental investment. Click the icon to view the data for the four projects. Which project(s) should be excluded from subsequent consideration? Select all that apply. A. None of the projects B. Project A2 C. Project A1 D. Project A3 E. Project A4 Fill in the table below. (Round to two decimal places.) Project A1 A2 A3 A4 Incremental Investment A4-A3 A2-A4 I BC (1) 47 1.36 2.8 1.64 BC(0) K-J

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Let PW(A) be the present worth of investment alternative A, PW(B) be the present worth of investment alternative B, B/C(A) be the benefit-cost ratio for investment alternative A, and B/C(B) be the benefitcost ratio for investment alternative B. If PW(A) > PW(B) > $0, which of the following answers is correct? a) B/C(A) > B/C(B); b) B/C(A) > B/C(B) > 1.0; c) B/C(A) > 1.0 and B/C(B) > 1.0; d) insufficient information available to answer
Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 2 projects. Projects 4 and 1 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution. Project Cost Net Present Value $260, 000 $290, 000 1 $750,000 2 $740.000 3 $225,000 $550,000 4 $260,000 $760,000 $300,000 $780,000 Which projects should be selected? Project 1 will Project 2 will Project 3 will Project 4 will Project 5 will What is the total net present value of these projects? Total net present value
What is the essential difference between the conventional and modified versions of the benefit–cost ratio? Is it possible for these two measures to provide conflicting recommendations regarding invest/do-not-invest decisions?
The recreation department for Southampton Ontario is trying to decide how to develop a piece of land. It has narrowed the choices down to tennis courts or a swimming pool. The swimming pool will cost $2.5 million to construct and will cost $300 000 per year to operate, but will bring benefits of $475 000 per year over its 25-year expected life. Tennis courts would cost $200 000 to build, cost $20 000 per year to operate, and bring $60 000 per year in benefits over their eight-year life. Both projects are assumed to have a salvage value of zero years. The appropriate MARR is 5%. a) Which project is preferable? Use a BCR and an annual worth approach. b) Which project is preferable using a BCRM and an annual worth approach?
Conduct a feasibility study for a project that your company is considering. Your report should focus on a financial or economic evaluation of the project
In the table below presented the data on the investment in the renewable energy source (wind farm). This wind farm will be located in the scenic area (has a visual impact on the communities close by). Costs are estimated as follows: Construction cost = $750,000 Maintenance cost = $5,000 per year for the next 15 years Cost of dismantling at the end of 15-year lifespan = $35,000 Compensation for view loss = $25 annually per household for 2,000 household Benefits as follows: Market value of electricity = $150,000 per year Directions: 1. Construct the table for CBA analysis 2. Calculate present value (PV) of costs and benefits using the CBA table 3. Conduct a CBA test (as difference between present value of benefits and costs) 4. Make a decision on investment (Yes/No)
A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of the unit is $3 million. Environmental impact studies cost $25,000 to be paid prior to starting construction. Annual costs are estimated to include:Plant operating expenses: $30,000.Environmental remediation expenses: $32,000.As a benefit of the incinerator, a cost reduction of $12 is estimated. annually to the invoice of the company's 35,000 clients. The equipment is estimated to have a useful life of 20 years, after which the incinerator will be dismantled at a cost of $50,000. Assuming that the money is raised at 7% interest, what is the benefit-to-cost ratio of this project? a.1,204 b.None of the answers is correct c.1,250 d.1,186 e.1,238
Describe in detail why a project with a Present Worth (PW) equal to or greater than zero is economically justifiable
* Your answers are incorrect. A county will invest $4,200,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 9-year planning horizon, an additional $1,000,000 will be spent in restoring the site to an environmentally acceptable condition. The investment is expected to produce net annual benefits that will decrease by 29% each year. The net annual public benefit in the 1st year is estimated to be $2,300,000. Determine the B/C ratio for the investment using a 4% MARR. Click here to access the TVM Factor Table calculator. B/C = 13.499 Carry all interim calculations to 5 decimal places and then round your final answer to 3 decimal places. The tolerance is ±0.003.
Show in excel A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4, 281 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit where they will earn 15%. (a) Identify six combinations of project investments and a bank deposit which exhaust the budget. (b) Which of the above combinations should the firm choose: when the reinvestment rate is 15%? (ii) when the reinvestment rate is 20%?
Caribbean countries have high electricity costs, utilize energy inefficiently relative to Latin American countries and are susceptible to natural disasters like hurricanes. However, the Caribbean can benefit from lower electricity costs, improving competitiveness and productivity as well as reduce its dependency on oil imports and CO2 emissions by investing in sustainable energy measures. The governments of two countries in the Caribbean decided to invest in a sustainable energy project. You are asked to conduct an investment and project appraisal for these projects. Outline the key areas that you would examine ◄ Students' Questions on Unit 6
Caribbean countries have high electricity costs, utilize energy inefficiently relative to Latin American countries and are susceptible to natural disasters like hurricanes. However, the Caribbean can benefit from lower electricity costs, improving competitiveness and productivity as well as reduce its dependency on oil imports and CO2 emissions by investing in sustainable energy measures. The governments of two countries in the Caribbean decided to invest in a sustainable energy project. You are asked to conduct an investment and project appraisal for these projects. Outline the key areas that you would examine.