3. To compare the feasibility of a project, the following information was provided. To the People To the Government Benefits $110,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years $25,000 per year $100,000 per year Disbenefits Savings a) Calculate the conventional benefit/cost ratios using an interest rate of 6% per year and an infinite project period. b) Calculate the modified benefit/cost ratios using an interest rate of 12% per year and an infinite project period.

3. To compare the feasibility of a project, the following information was provided. To the People To the Government Benefits $110,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years $25,000 per year $100,000 per year Disbenefits Savings a) Calculate the conventional benefit/cost ratios using an interest rate of 6% per year and an infinite project period. b) Calculate the modified benefit/cost ratios using an interest rate of 12% per year and an infinite project period.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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From the following data, calculate the (a) conventional and (b) modified benefit/cost ratios using a discount rate of 6% per year and a very long (infinite) project life.
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