From the beneath table find best B/C ratio. Assume the program period for each is six...

From the beneath table find best B/C ratio.

Assume the program period for each is six year and interest rate is 6%.

Program	Initial cost year 0	Annual cost year 2 through 6	Estimated benefits year 2 through 6
1	700,000	350,000	542,433
2	2,200,000	500,000	1.084,867
3	1,200,000	140,000	433,947

Solutions

Expert Solution

Program	1	2	3
Initial cost year 0	700,000	2,200,000	1,200,000
Annual cost year 2 through 6	350,000	500,000	140,000
Estimated benefits year 2 through 6	542,433	1,084,867	433,947
Net Annual Benefits year 2 through 6 (Annual Benefits – Annual Cost)	192,433	584,867	293,947
Benefit – Cost Ratio	1.09	1.06	0.97

Program period for each is six year and interest rate is 6%.

B/C Ratio using PW Method = PW of Benefits / Initial cost

Programme – 1

B-C Ratio = 192,433 (P/A, 6%, 5) (P/F, 6%, 1) / 700,000

B-C Ratio = 192,433 (4.2124) (0.9434) / 700,000

B-C Ratio = 1.09

Programme – 2

B-C Ratio = 584,867 (P/A, 6%, 5) (P/F, 6%, 1) / 2,200,000

B-C Ratio = 584,867 (4.2124) (0.9434) / 2,200,000

B-C Ratio = 1.06

Programme – 3

B-C Ratio = 293,947 (P/A, 6%, 5) (P/F, 6%, 1) / 1,200,000

B-C Ratio = 293,947 (4.2124) (0.9434) / 1,200,000

B-C Ratio = 0.97

Decision – The best benefit cost ratio is 1.09 of Programme – 1

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

From the beneath table find best B/C ratio. Assume the program period for each is six...

From the beneath table find best B/C ratio. Assume the program period for each is six year and interest rate is 6%. Program Initial cost year 0 Annual cost year 2 through 6 Estimated benefits year 2 through 6 1 700,000 350,000 542,433 2 2,200,000 500,000 1.084,867 3 1,200,000 140,000 433,947

There are two ways for finding the benefit to cost ratio (B/C Ratio) B/C Ratio =...

There are two ways for finding the benefit to cost ratio (B/C Ratio) B/C Ratio = [ Annual Benefits-Annual Disbenefits] / [Annual Cost of Implementing Project] B/C Ratio = [NPV of Benefits-NPV of Disbenefits] / [NPV of Implementing Project] If the B/C Ratio is greater than one, we can infer that the project is worth undertaking. Note that there can only be one B/C ratio for a project (unlike IRR which can at times have multiple values) Problem: The City...

Find each probability P(X; λ) using Table C in Appendix A. a. P(10; 7) b. P(9; 8) c. P(3; 4) Data from in Table C Appendix A

Find each probability P(X; λ) using Table C in Appendix A.a. P(10; 7)b. P(9; 8)c. P(3; 4) Data from in Table C Appendix A

Find each probability P(X; λ), using Table C in Appendix A. a. P(5; 4) b. P(2; 4) c. P(6; 3) Data from in Table C Appendix A

Find each probability P(X; λ), using Table C in Appendix A.a. P(5; 4)b. P(2; 4)c. P(6; 3)Data from in Table C Appendix A

Write a C++ program Given fuzzy sets A and B, find complement A, A ∪ B,...

Write a C++ program Given fuzzy sets A and B, find complement A, A ∪ B, and A ∩ B A = {0.2 : a, 0.7 : b, 0.5 : c, 0.01 : k, 0.98 : z} and B = {0.42 : a, 0.6 : b, 0.5 : h, 0.1 : k, 0.44 : m, 0.8 : z}

The current price of the stock of Bufflehead company is C$100. During each six-month period it...

The current price of the stock of Bufflehead company is C$100. During each six-month period it will either rise by 10% or fall by 10%. The interest rate is 6% per annum compounded semi-annually. a. Calculate the value of a one-year European put option on Bufflehead's stock with an exercise price of C$115. b. Recalculate the value of the Bufflehead put option, assuming that it is an American option.

solve each right triangle? 1. b=4in,A=10(degrees) find a=, c=, and B= 1B: b=4ft, c=6ft Find: a,...

solve each right triangle? 1. b=4in,A=10(degrees) find a=, c=, and B= 1B: b=4ft, c=6ft Find: a, A, and B

write C++ program using functions (separate function for each bottom) Write a program to find if...

write C++ program using functions (separate function for each bottom) Write a program to find if a number is large word for two given bottom base - bottom1 and bottom2. You can predict that a number, when converted to any given base shall not exceed 10 digits. . the program should ask from user to enter a number that it should ask to enter the base ranging from 2 to 16 after that it should check if the number is...

Find out the NPV, IRR and Payback period for each of the following three projects. Assume...

Find out the NPV, IRR and Payback period for each of the following three projects. Assume I=6%. (60 points) Project CF0 CF1 CF2 CF3 CF4 CF5 A -12,000 3000 3000 4000 4000 1000 B -12,000 4000 4000 3000 3000 1000 C -12,000 3000 3000 3000 3000 1000 D -12,000 5000 3000 5000 3000 0 E -12,000 3000 3000 3000 3000 5000 F -12,000 0 0 6000 6000 6000

Find out the NPV, IRR and Payback period for each of the following three projects. Assume...

Find out the NPV, IRR and Payback period for each of the following three projects. Assume I=6%. Please show work and write out answers. Do not put into a table. Thank you Project CF0 CF1 CF2 CF3 CF4 CF5 A -12,000 3000 3000 4000 4000 1000 B -12,000 4000 4000 3000 3000 1000 C -12,000 3000 3000 3000 3000 1000 D -12,000 5000 3000 5000 3000 0 E -12,000 3000 3000 3000 3000 5000 F -12,000 0 0 6000...

Subjects