A public sector project will have the following cash flows. Annual benefits = $900,000 $50,000 Initial Cost = $10M Yearly maintained cost $80,000. If MARR is 7%, what is the modified B/C ratio for this project? 01.058 1.063 1.053 01.056 = Expected annual dis-benefits (quantifiable) - Life = 50 years.
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- 5,6,7 search Saved Help S GEThe B/C ratio for the following cash flow estimates calculated at an interest rate of 10% is .89, which means that the project is currently not justified. What would the maximum first cost be for this project to be justified? Item PW of benefits, $ AW of disbenefits, $/year First cost, $ M&O costs, $/yr Life, years Estimate 3,800,000 45,000 1,200,000 310,000 20 775,723 140,952 863,993 1,092,000IC OM B D Life/years X Z Y X $320,000 $45,000 $110,000 $20,000 10 W Y $540,000 $35,000 $150,000 $45,000 20 Based on the above ME alternatives and using the B/C analysis, which alternative we should select?i=10%. Z $300,000 $50,000 $80,000 $10,000 10 W $330,000 $20,000 $95,000 $30,000 20 V $250,000 $40,000 $90,000 $10,000 15
- Determine the best alternatives for a government project with the following data: PROJECT A B с ANNUAL BENEFIT P250k P320k P350k P100k P135k ANNUAL COSTS B/C RATIO 2.5 2.37 p180k 1.94M ences Calculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Estimate 3,550,000 45,000 1,025,000 220,000 20 Item PW of Benefits, S AW of Disbenefits, $/year First Cost, $ M&O Costs, $/Year Life, Years The B/C ratio is The project is (Click to select)Using the incremental B / C analysis (AB/C). Determine the best alternative. Using the incremental rate of return (AROR) analysis. Determine the best alternative. MARR = 10%. First cost O &M Cost/year Benefit/year Salvage value Life in years A 45,000 $4,000 $15,000 $9,000 B $25,000 $1,500 $9,500 $5,000 10 C $35,000 $3,000 $14,000 $7,000 $15,000 $2,000 $8,000 $3,000
- 4. Incremental ROR and B/C methods require the LCM of the two alternatives being compared. Select one: True FalseGiven the data for two alternatives, choose the better alternative using the B/C ratio analysis. MARR = 8% (Hint: If using EUAW, change each first cost to annual fırst then do incremental. If using PW, match the cash flows (rebuy Bottom) before subtracting.) Alternative Bottom Тop First Cost $100,000 $140.000 Operating Costs/Yr 50,000 100,000 60,000 Benefits/Yr 120,000 Maintenance/Yr 30,000 25,000 Life in years 10Demonstrate that for this highway construction project, the same B/C ratio is obtained using the present and annual worth formulations. Initial costs of construction $1,500,000 Annual costs for maintenance 65,000 Annual benefits to travelers 225,000 Residual value after useful life 300,000 Useful life of investment 30 years Interest rate 8%
- Four mutually exclusive revenue alternatives are being compared using the B/C method. Which alternative, if any, should be selected? Incremental B/C when compared with alternative A OOOO A B с D Alternative ABCD Initial cost 15 18 30 35 B/C ratio vs. "Do Nothing" 1.52 0.92 1.31 1.47 B 0.95 C 0.71 1.85 - D 0.89 1.31 1.354. Using the incremental B / C analysis (∆B/C). Determine the best alternative.5. Using the incremental rate of return (∆RoR) analysis. Determine the best alternative. MARR =10%. A B C DFirst cost 45,000 $25,000 $35,000 $15,000O &M Cost/year $4,000 $1,500 $3,000 $2,000Benefit/year $15,000 $9,500 $14,000 $8,000Salvage value $9,000 $5,000 $7,000 $3,000Life in years 10The two alternatives shown are under consideration for improving security at a facility. Determine which one should be selected, if any, based on a B/C analysis. Consider an interest rate of 7% per year and a 10-year study period. Additional information is provided in Table Q 6(b). Page 4 of 5 Table Q 6(b) Alternative 1: Extra Cameras | Alternative 2: New Sensors First cost, $ Annual O&M cost, $ 38000 87000 49000 64000 Annual benefits, $ Annual disbenefits, $ 110000 160000 26000