To develop Olympic hopefuls, a municipality will construct a dual-purpose facility: a refrigeratedparking garage that can also be used as a ski tunnel for training skiers. Estimates for two proposalsare given below. The municipality uses an annual interest rate of 10%.Project LifeInitial InvestmentPresent Worth of BenefitsPresent Worth of O&M CostsBenefit-Cost ratio (10%)Proposal 150 years$10,000,000$21,812,592$1,982,963?Proposal 250 years$15,000,000$32,223,147$3,965,9261.70a. What is the Benefit-Cost ratio for "Proposal 1?"[Select]b. Based on a Benefit-Cost analysis, which proposal should be selected?[ Select]2 a. What is the Benefit-Cost ratio for "Proposal 1?"b. Based on a Benefit-Cost analysis, which propos[ Select][Select][Select]1.881.821.701.98

Benefit cost ratio is an important metric when we look at analyzing and determining the financial…

Answered: a. What is the Benefit-Cost ratio for…

a. What is the Benefit-Cost ratio for "Proposal 1?" [Select] b. Based on a Benefit-Cost analysis, which proposal should be selected? [Select] >

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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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 be 85 years, and the sponsoring agency's MARR is 10% per year. Annual 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. Alternative A C D $150,000 $20,000 $51,000 $56,000 $9,500 $64,000 $10,500 Initial cost Annual benefits $8,000 B-C ratio 1.33 1.57 1.70 1.64 ..... Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative Inc. B-C ratio Is the alternative acceptable? B 1.57 Yes
Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 80 years, and the sponsoring agency's MARR is 10% per year. Annual 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. Alternative A B C D Initial cost $140,000 $61,000 $56,000 $54,000 Annual benefits $19,000 $10,500 $9,500 $7,500 B-C ratio 1.36 1.72 1.70 1.39 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative Inc. B-C ratio D 1.39 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 75 years, and the sponsoring agency's MARR is 9% per year. Annual 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. Alternative A В Initial cost $56.000 $61,000 $10,500 $155,000 $20,000 $53,000 Annual benefits S8,500 $7,000 B-C ratio 1.68 1.91 1.43 1.47 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative Inc. B-C ratio Is the alternative acceptable? D 1.47 Yes
Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 75 years, and the sponsoring agency's MARR is 12% per year. Annual 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 Alternative Initial cost $56,000 Annual benefits $9,000 B-C ratio 1.34 B $61,000 $11,000 1.50 C $50,000 $7,000 1.17 D $145,000 $19,000 1.09 Perform the incremental B-C Analysis. Fill-in the table below (Round to two decimal places.) Alternative C Inc. B-C ratio Is the alternative acceptable? 1.17 Yes
Outdoor Structures, Inc. is considering two projects, A and B. Each project requires an investment of $1,000. Using the payback period as the method for analyzing each project, which project should Outdoor Structures choose? Year A B 1 $100 $500 2 200 400 3 300 300 400 100 500 600 4 5 6 - --
Net Present Value and Competing Projects Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirements below. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 12%, compute the net present value of each piece of equipment. Puro equipment: $fill in the blank 1 Briggs equipment: $fill in the blank 2 2. A third option has…
Two renewable energy alternatives are available for providing energy at a remote federal research facility. The cash flow estimates associated with each alternative are given below. Use the conventional benefit-cost ratio method, with AW as the equivalent-worth measure, to determine which alternative should be selected at an interest rate of 14% per year over a 25- year study period. One alternative must be selected. Alternative I Alternative II Initial cost, $ $1,000,000 $990,000 Annual maintenance, $/year $380,000 $359,500 Annual benefits, $/year $500,000 $459,500 Salvage value, $ $17,000 $15,800 (a) Benefit-cost ratio of incremental cash flow = (b) Choose Alternative
Jim Jones Sleepaway Camps, Inc. is looking for some payback period analysis for a new project in Janestown, Indiana. Suppose that the cost of acquiring the new camp, buildings, cabins, etc. and setting up trails and activities has an initial cost of $1.3M dollars but will generate the following cash-flows for the next four years: Year 1 $450,000 Year 2 $610,000 Year 3 $464,000 Year 4 $575,000 What is the payback period for this project
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows Capital investment Annual net income: (a) Year 1 2 3 4 5 Total ow Transcribed Text Project Bono $160,000 Project Bono 14,000 Project Edge 14,000 Project Clayton 14.000 ow Transcribed Text 14,000 Your answer is incorrect. 14,000 $70,000 Project Edge Project Clayton $175,000 $200,000 18,000 17,000 16,000 12,000 9,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15% (Assume that cash $72,000 O Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. years Compute the cash payback period for each project. (Round answers to 2 decimal places, eg years C years 27,000 23,000 9 21.000 13,000 C 12,000 $96,000 1.50.) (b) The parts…
Required information A government-funded wind-based electric power generation company in the southern part of the country has developed the following estimates (in $1000) for a new turbine farm. The MARR is 10% per year and the project life is 25 years. Benefits: $45,000 in year 0; $31,000 in year 4 Government savings: $2,000 in years 1 through 20 Cost: $64,000 in year O Disbenefits: $3000 in years 1 through 10 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Calculate the Pl value. The Pl value is 1.025
! Required information A government-funded wind-based electric power generation company in the southern part of the country has developed the following estimates (in $1000) for a new turbine farm. The MARR is 10% per year and the project life is 25 years. Benefits: $45,000 in year 0; $27,000 in year 6 Government savings: $2,000 in years 1 through 20 Cost: $48,000 in year O Disbenefits: $3000 in years 1 through 10 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Calculate the conventional B/C ratio. The conventional B/C ratio is
Net Present Value and Competing Projects Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 16%, compute the net present value of each piece of equipment. Puro equipment: $fill in the blank Briggs equipment: $fill in the blank 2. A third option has surfaced for equipment purchased from an out-of-state supplier. The cost is also $560,000, but this…