In: Economics
The following two investment alternatives are being evaluated using the B/C ratio method. The alternatives have a 5-year service life and the MARR is 18% per year.
Alternative A |
Alternative B |
|
Capital investment |
$10,900 |
$16,000 |
Annual revenues |
4,000 |
7,500 |
Annual costs |
250 |
900 |
Market value at EOY 5 |
5,000 |
9,200 |
Click the icon to view the interest and annuity table for discrete compounding when i equals=18%per year.
Calculate the modified B/C ratio of Alternative A
A.
1.32
B.1.35
C.1.26
D.0.90
Calculate the incremental modified B/C ratio between the two alternatives
A.
2.73
B.1.79
C.1.28
D.2.07