As part of the rehabilitation of the downtown area of a southern U.S. city, the Parks and Recreation Department expects to develop the space below several overpasses into basketball, handball, miniature golf, and tennis courts. The estimates are: initial cost of $190,000, life of 20 years, and annual M&O costs of $21,000. The department expects 20,000 people per year to use the facilities an average of 2 hours each. The value of the recreation has been conservatively set at $1.00 per hour. At a discount rate of 6% per year, what is the B/C ratio for the project?
As part of the rehabilitation of the downtown area of a southern U.S. city, the Parks and Recreation Department expects to develop the space below several overpasses into basketball, handball, miniature golf, and tennis courts. The estimates are: initial cost of $190,000, life of 20 years, and annual M&O costs of $21,000. The department expects 20,000 people per year to use the facilities an average of 2 hours each. The value of the recreation has been conservatively set at $1.00 per hour. At a discount rate of 6% per year, what is the B/C ratio for the project?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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As part of the rehabilitation of the downtown area
of a southern U.S. city, the Parks and Recreation
Department expects to develop the space below
several overpasses into basketball, handball, miniature
golf, and tennis courts. The estimates are:
initial cost of $190,000, life of 20 years, and
annual M&O costs of $21,000. The department
expects 20,000 people per year to use the facilities
an average of 2 hours each. The value of the recreation
has been conservatively set at $1.00 per
hour. At a discount rate of 6% per year, what is the
B/C ratio for the project?
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