[CLO-6] A project will have an initial cost of $1.1 million with an annual maintenance cost of $10,000 and a 10-year life. The benefits of the project are expected to be $175,000 per year while the disbenefits (reduced from benefits) are estimated to be $25,000 per year. Using the conventional B-C ratio method with AW, calculate the B-C ratio assuming an interest rate of 6% per year.

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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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Question 42
[CLO-6) A project will have an initial cost of $1.1 million with an annual maintenance cost of $10,000 and a 10-year life. The benefits of the project are expected to be $175,000 per year while
the disbenefits (reduced from benefits) are estimated to be $25,000 per year. Using the conventional B-C ratio method with AW, calculate the B-C ratio assuming an interest rate of 6% per
year.
Transcribed Image Text:Question 42 [CLO-6) A project will have an initial cost of $1.1 million with an annual maintenance cost of $10,000 and a 10-year life. The benefits of the project are expected to be $175,000 per year while the disbenefits (reduced from benefits) are estimated to be $25,000 per year. Using the conventional B-C ratio method with AW, calculate the B-C ratio assuming an interest rate of 6% per year.
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