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
A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. Solve, a. Which system has the greatest B–C ratio? b. Which system has the largest incremental B–C ratio
(based on differences between alternatives)? c. Which system should be chosen ?
Transcribed Image Text:System
1
2
3
4
PW of
$1,000 $4,000 $4,000 $10,000 $12,000
costs
PW of
8,000 8,000 14,000 16,000 24,000
benefits
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