Description Data Capital investment $1,000,000 Project life 20 years Incremental annual benefits $220,000 Incremental annual costs S80,000 Salvage value $40,000 Discount rate 5%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A city government is considering increasing the capacity of the current waste
water treatment plant. The estimated financial data for the project are as fo llows:

Calculate the benefit-cost ratio for this capacity expansion project.

Description
Data
Capital investment
$1,000,000
Project life
20 years
Incremental annual benefits
$220,000
Incremental annual costs
S80,000
Salvage value
$40,000
Discount rate
5%
Transcribed Image Text:Description Data Capital investment $1,000,000 Project life 20 years Incremental annual benefits $220,000 Incremental annual costs S80,000 Salvage value $40,000 Discount rate 5%
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