A local municipality is considering investing $220,000 to upgrade a park. Based on similar investments made by similar cities, it is anticipated the investment will result in annual costs and annual benefits over a 7-year period as shown in the cash flow profile given below in thousands of dollars. Notice, an intermediate investment of $140,000 is anticipated in the 6th year of the investment. Based on a MARR of 5%, calculate the benefit-cost ratio of the investment. Round answer to two decimal places. (All values in thousand dollars) End-of Year Costs Benefits Net Cash Flow $220 -$220 $70 $120 $50 2. $70 $130 $60 3. $70 $140 $70 4 $70 $150 $80 $70 $160 $90 6. $210 $170 $40 7. $70 $160 $90

A local municipality is considering investing $220,000 to upgrade a park. Based on similar investments made by similar cities, it is anticipated the investment will result in annual costs and annual benefits over a 7-year period as shown in the cash flow profile given below in thousands of dollars. Notice, an intermediate investment of $140,000 is anticipated in the 6th year of the investment. Based on a MARR of 5%, calculate the benefit-cost ratio of the investment. Round answer to two decimal places. (All values in thousand dollars) End-of Year Costs Benefits Net Cash Flow $220 -$220 $70 $120 $50 2. $70 $130 $60 3. $70 $140 $70 4 $70 $150 $80 $70 $160 $90 6. $210 $170 $40 7. $70 $160 $90

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A local municipality is considering investing $220,000 to upgrade a park. Based on similar investments made by similar
cities, it is anticipated the investment will result in annual costs and annual benefits over a 7-year period as shownin
the cash flow profhle given below in thousands of dollars. Notice, an intermediate investment of $140,000 is
anticipated in the 6th year of the investment. Based on a MARR of 5%, calculate the benefit-cost ratio of the
investment. Round answer to two decimal places.
(All values in thousand dollars)
End-of Year
Costs
Benefits
Net Cash Flow
$220
-$220
$70
$120
$50
$70
$130
$60
$70
$140
$70
4
$70
$150
$80
$70
$160
$90
$210
$170
-$40
7.
$70
$160
$90
1.45
2.
in

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