A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of the unit is $3 million. Environmental impact studies cost $25,000 to be paid prior to starting construction. Annual costs are estimated to include: Plant operating expenses: $30,000. Environmental remediation expenses: $32,000. As a benefit of the incinerator, a cost reduction of $12 is estimated. annually to the invoice of the company's 35,000 clients. The equipment is estimated to have a useful life of 20 years, after which the incinerator will be dismantled
A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of the unit is $3 million. Environmental impact studies cost $25,000 to be paid prior to starting construction. Annual costs are estimated to include:
Plant operating expenses: $30,000.
Environmental remediation expenses: $32,000.
As a benefit of the incinerator, a cost reduction of $12 is estimated. annually to the invoice of the company's 35,000 clients. The equipment is estimated to have a useful life of 20 years, after which the incinerator will be dismantled at a cost of $50,000. Assuming that the money is raised at 7% interest, what is the benefit-to-cost ratio of this project?
a.
1,204
b.
None of the answers is correct
c.
1,250
d.
1,186
e.
1,238
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