8s.2 A city government is considering increasing the capacity of the current wastewater treatment plant. The estimated financial data for the project are as follows: Description Data Capital investment $1,200,000 |Project life 25 years Incremental annual benefits $250,000 Incremental annual costs $100,000 Salvage value $50,000 Discount rate 6% What would be the benefit-cost ratio for this expansion project? а. 3.26 b. 3.12 C. 1.30 d. 2.23

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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8s.2 A city government is considering increasing the capacity of the current wastewater treatment plant. The estimated financial data for the
project are as follows:
Description
Data
Capital investment
$1,200,000
Project life
25 years
Incremental annual benefits
$250,000
Incremental annual costs
$100,000
Salvage value
$50,000
Discount rate
6%
What would be the benefit-cost ratio for this expansion project?
а. 3.26
b. 3.12
C. 1.30
d. 2.23
Transcribed Image Text:8s.2 A city government is considering increasing the capacity of the current wastewater treatment plant. The estimated financial data for the project are as follows: Description Data Capital investment $1,200,000 Project life 25 years Incremental annual benefits $250,000 Incremental annual costs $100,000 Salvage value $50,000 Discount rate 6% What would be the benefit-cost ratio for this expansion project? а. 3.26 b. 3.12 C. 1.30 d. 2.23
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