In: Economics
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 |
Program |
1 |
2 |
3 |
|||||||||
Year |
Cost |
benefit |
Discounted Cost |
Discounted benefit |
Cost |
benefit |
Discounted Cost |
Discounted benefit |
Cost |
benefit |
Discounted Cost |
Discounted benefit |
1 |
7,00,000 |
660377.36 |
0.00 |
22,00,000 |
2075471.70 |
0.00 |
12,00,000 |
1132075.47 |
0.00 |
|||
2 |
3,50,000 |
5,42,433 |
311498.75 |
482763.44 |
5,00,000 |
10,84,867 |
444998.22 |
965527.77 |
1,40,000 |
4,33,947 |
124599.50 |
386211.29 |
3 |
3,50,000 |
5,42,433 |
293866.75 |
455437.21 |
5,00,000 |
10,84,867 |
419809.64 |
910875.25 |
1,40,000 |
4,33,947 |
117546.70 |
364350.27 |
4 |
3,50,000 |
5,42,433 |
277232.78 |
429657.74 |
5,00,000 |
10,84,867 |
396046.83 |
859316.28 |
1,40,000 |
4,33,947 |
110893.11 |
343726.67 |
5 |
3,50,000 |
5,42,433 |
261540.36 |
405337.49 |
5,00,000 |
10,84,867 |
373629.09 |
810675.73 |
1,40,000 |
4,33,947 |
104616.14 |
324270.44 |
6 |
3,50,000 |
5,42,433 |
246736.19 |
382393.86 |
5,00,000 |
10,84,867 |
352480.27 |
764788.43 |
1,40,000 |
4,33,947 |
98694.48 |
305915.51 |
Total |
2051252.19 |
2155589.74 |
4062435.75 |
4311183.46 |
1688425.41 |
1724474.18 |
||||||
B/C ratio |
1.05 |
1.06 |
1.02 |
So, program 2 has the highest B:C ratio