FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- A proposed bridge on the interstate highway is being considered at the cost of 4 million dollars. It is expected that the bridge will have a life of 30 years. Construction costs will be paid by government agencies. Operation and maintenance costs are estimated to be $250,000 per year. Benefits to the public are estimated to be $900,000 per year. The building of the bridge will result in an estimated cost of $250,000 per year to the general public. The project requires a return of 5%. Determine the benefit/cost (B/C) ratio.arrow_forward4.) Two mutually exclusive alternative public works projects are under consideration. Their respective costs and benefits are included in the table below. Project A has an anticipated life of 35 years, and the useful life of Project B has been estimated to be 25 years. If the interest rate is 9%, which, if either, of these projects should be selected? Capital investment Annual oper. & maint. costs Annual benefit Useful life of project (years) PROJECT A 375,000 60,000 122,500 35 PROJECT B 312,500 55,000 115,000 25arrow_forwardThe following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment $ 36,000 Annual cost savings $ 11,000 Estimated salvage value $ 4,000 Life of the project 5 years Discount rate 13% Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)arrow_forward
- Bramblett Recording Studio is considering two investment proposals (1 and 2). Data for the two proposals are presented below: Proposal 1 Proposal 2 Cost of investment $75,000 $100,000 Estimated salvage value 15,000 20,000 Average estimated net income 18,000 13,200 Calculate the return on average investment for both proposals.arrow_forwardThe conventional B/C ratio for a flood control project along the Mississippi River was calculated to be 1.3. The benefits were $500,000 per year and the maintenance costs were $200,000 per year. What was the initial cost of the project if a discount rate of 7% per year was used and the project was assumed to have a 50-year life?arrow_forwardThe Dry Dock is considering a project with an initial cost of $107,770 and cash inflows for years 1 to 3 of $37,200 $54,600 and $46,900 respectively. What is the IRR?arrow_forward
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