4. A project will cost $50,000. The benefits at the end of the first year are estimated to be $10,000, increasing $1000 per year in subsequent years. Assume a 12% interest rate, no salvage value, and an eight-year analysis period. What is the Benefit-Cost Ratio?

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Chapter1: Making Economics Decisions
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4. Use the provided chart to solve this problem. Show your work.

factor name
single payment
compound amount
single payment
present worth
uniform series
sinking fund
capital recovery
uniform series
compound amount
uniform series
present worth
uniform gradient
present worth
uniform gradient
future worth
uniform gradient
uniform series
converts
P to F
F to P
F to A
P to A
A to F
A to P
G to P
G to F
G to A
symbol
(F/P, i%, n)
(P/F, 1%, n)
(A/F, i%, n)
(A/P, i%, n)
(F/A, 1%, n)
(P/A, i%, n)
(P/G,i%, n)
(F/G,1%, n)
(A/G, i%, n)
formula
(1 + i)"
(1 + i)-¹
i
(1 + i)" - 1
i(1+i)"
(1+i)n-1
(1+i)n-1
i
(1+i)n-1
i(1+i)n
1-
i
(1+i)n-1
1² (1+i)n
n
i(1+i)n
(1+i)n-1
n
i
n
(1+i)n-1
Transcribed Image Text:factor name single payment compound amount single payment present worth uniform series sinking fund capital recovery uniform series compound amount uniform series present worth uniform gradient present worth uniform gradient future worth uniform gradient uniform series converts P to F F to P F to A P to A A to F A to P G to P G to F G to A symbol (F/P, i%, n) (P/F, 1%, n) (A/F, i%, n) (A/P, i%, n) (F/A, 1%, n) (P/A, i%, n) (P/G,i%, n) (F/G,1%, n) (A/G, i%, n) formula (1 + i)" (1 + i)-¹ i (1 + i)" - 1 i(1+i)" (1+i)n-1 (1+i)n-1 i (1+i)n-1 i(1+i)n 1- i (1+i)n-1 1² (1+i)n n i(1+i)n (1+i)n-1 n i n (1+i)n-1
4. A project will cost $50,000. The benefits at the end of the first year are estimated to
be $10,000, increasing $1000 per year in subsequent years. Assume a 12% interest
rate, no salvage value, and an eight-year analysis period. What is the Benefit-Cost
Ratio?
Transcribed Image Text:4. A project will cost $50,000. The benefits at the end of the first year are estimated to be $10,000, increasing $1000 per year in subsequent years. Assume a 12% interest rate, no salvage value, and an eight-year analysis period. What is the Benefit-Cost Ratio?
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