a. What is the Benefit-Cost ratio for "Proposal 1?" [Select] b. Based on a Benefit-Cost analysis, which proposal should be selected? [Select] >
a. What is the Benefit-Cost ratio for "Proposal 1?" [Select] b. Based on a Benefit-Cost analysis, which proposal should be selected? [Select] >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![To develop Olympic hopefuls, a municipality will construct a dual-purpose facility: a refrigerated
parking garage that can also be used as a ski tunnel for training skiers. Estimates for two proposals
are given below. The municipality uses an annual interest rate of 10%.
Project Life
Initial Investment
Present Worth of Benefits
Present Worth of O&M Costs
Benefit-Cost ratio (10%)
Proposal 1
50 years
$10,000,000
$21,812,592
$1,982,963
?
Proposal 2
50 years
$15,000,000
$32,223,147
$3,965,926
1.70
a. What is the Benefit-Cost ratio for "Proposal 1?"
[Select]
b. Based on a Benefit-Cost analysis, which proposal should be selected?
[ Select]
2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1c1f0d0-8c16-4d12-8a46-bf5d3c18c1aa%2Fbcdc2dc7-b9fa-4449-8a60-2c7ab56702fa%2Fbotosxj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:To develop Olympic hopefuls, a municipality will construct a dual-purpose facility: a refrigerated
parking garage that can also be used as a ski tunnel for training skiers. Estimates for two proposals
are given below. The municipality uses an annual interest rate of 10%.
Project Life
Initial Investment
Present Worth of Benefits
Present Worth of O&M Costs
Benefit-Cost ratio (10%)
Proposal 1
50 years
$10,000,000
$21,812,592
$1,982,963
?
Proposal 2
50 years
$15,000,000
$32,223,147
$3,965,926
1.70
a. 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]
1.88
1.82
1.70
1.98](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1c1f0d0-8c16-4d12-8a46-bf5d3c18c1aa%2Fbcdc2dc7-b9fa-4449-8a60-2c7ab56702fa%2F0i46wl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:a. What is the Benefit-Cost ratio for "Proposal 1?"
b. Based on a Benefit-Cost analysis, which propos
[ Select]
[Select]
[Select]
1.88
1.82
1.70
1.98
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