Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 16, Problem 9P
To determine
Calculate the benefit cost ratio.
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What is the B/C Ratio for a firm considering an investment in a new manufacturing technology? Investment = $2,500,000 Salvage Value = $150,000 MARR = 15%
Net Annual Savings = $600,000 Project Life = 10 years
Please don't just use excel, please show steps..
Calculate the modified and conventional B-C Ratio using AW in four decimal places. Is the project acceptable?
Three mutually exclusive projects are being considered by Sesame Street Productions (SSP). The project details are provided in the table below. SSP has heard about your excellent analysis
skills and wants you to help them make a decision. Use a B/C analysis. SSP uses a MARR of 8%.
Calculate the B/C Ratio for each project and enter your answers with two decimal places as 1.23. If there is a zero before the decimal, you must enter it as 0.12.
Project A
Project B
Project C
SSP may eliminate project
SSP must choose project
Just enter the Project name as A, B, or C.
Initial Cost
Annual Benefits
Project life (years)
B/C Ratio
$500
based on the B/C Analysis.
$150
2
without performing an incremental analysis.
$450
$150
4
$600
$200
4
Chapter 16 Solutions
Contemporary Engineering Economics (6th Edition)
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- Don't use Ai. Answer in step by step with explanationarrow_forwardConsider the two mutually exclusive projects described in the table below. (Note: Each part of the question requires a written answer.) a) Assuming 9% minimum attractive rate of return (MARR), should either of the two projects be accepted? Why? b) Assuming 16% MARR, should either of the two projects be accepted? Why? c) For any positive value of the MARR, divide the possible MARR values into ranges with different decisions; describe and discuss what decision would be made in each range and why. You will need to calculate the crossover rate to determine the precise MARR where the decision changes. Include an NPV profile table and chart to illustrate your answer. Year 0 1 2 3 4 5 Cash Flow Cash Flow Project A Project B -450,000 -700,000 200,000 200,000 150,000 200,000 100,000 200,000 100,000 200,000 75,000 200,000arrow_forwardUsing the data from Problem 7 above, conduct a Conventional Incremental B/C Ratio Analysis for project 2 and 3. With a given annual interest rate of 8%, select the correct Incremental B/C ratio. The data from problem 7 you can find it in the first picture, please answer this asap.arrow_forward
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