From the following data, use the conventional B/C ratio for a project that has a 20-year life to determine if it is economically justified.Use an interest rate of 8% per year.To the PeopleAnnual benefits $115,000 per yearAnnual disbenefits $10,000 per year=ConsequencesTo the GovernmentFirst cost = $600,000Annual cost $33,000 per yearAnnual savings $30,000 per yearThe B/C ratio isThe project is justified

Present Value of Benefits: PVb=(115,000−10,000)×(1−(1+0.08)^−20)/0.08PVb=105,000×9.818149…

Answered: From the following data, use the…

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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The following data is provided for a PPP project To the People To the Government $1.8 million ndw and $200,000 every З уears $12d000 per year Benefits $95,000 per year beginning now Cost Disbenefits $35.000 per year Savings Calculate the modified benefit/cost ratios using an interest rate of 10% per year and an infinite project period. The modified B/C ratio is 07682
N5 The following data is provided for a PPP project. To the People To the Government Benefits $130,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years Disbenefits $45,000 per year Savings $90,000 per year Calculate the conventional benefit/cost ratios using an interest rate of 6% per year and an infinite project period.
Why are benefit cost ratios inappropriate for evaluating alternative projects?
In a feasible set, such as the one shown here, points INSIDE the set are said to be by points ON the frontier. Least-cost abatement curve A" 30 A' A 25 Feasible set E with zero abatement 400 600 Cost of abatement (billions € = cost per tonne abated x gigatonnes abated) Environmental quality, E (amount abated, GtCO,)
In a modified B/C ratio:a. disbenefits and M&O costs are subtracted from benefitsb. disbenefits are subtracted from benefits, and M&O costs are added to costsc. disbenefits and M&O costs are added to costsd. disbenefits are added to costs, and M&O costs are subtracted from benefits
Is the Benefit-cost analysis a decision-making tool for systematically developing useful information about the desirable and undesirable effects of public projects?
Question 1 You are interested in purchasing a car from the available three options. CAR-1 CAR-2 CAR-3 First Cost 17856 23456 28678 Operating cost ($/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.
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
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
M ences Calculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Estimate 3,550,000 45,000 1,025,000 220,000 20 Item PW of Benefits, S AW of Disbenefits, $/year First Cost, $ M&O Costs, $/Year Life, Years The B/C ratio is The project is (Click to select)
Apply incremental B/C analysis at an interest rate of 8% per year to determine which alternative should be selected. Use a 20-year study period, and assume the damage costs might occur in year 6 of the study period. Alternative A Alternative B Initial cost, S 600,000 800,000 Annual M&O 50,000 70,000 costs, S/year Potential damage 950,000 250,000 costs, S
The following data is provided for a PPP project. To the People To the Government $1.8 million ndiw and $200,000 every 3 years Benefits $95,000 per year beginning now Cost Disbenefits $35,000 per year Savings $120.000 per year Calculate the conventional benefit/cost ratios using an interest rate of 10% per year and an infinite project period. The conventional B/C ratio is 07882

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