Consider a piece of equipment that has the following cost and benefit estimates, and the interest rate is 15% per year: What is the modified B/C ratio of this equipment? Initial investment: $200,000Equipment life:Salvage value:Annual receipts:Annual expenses: $50,00010 years$10,000$100,000

The formula for calculating modified B/C ratio is given below. Modified B/C ratio =(AW of receipts -…

Answered: Initial investment: $200,000 Equipment…

Initial investment: $200,000 Equipment life: Salvage value: Annual receipts: Annual expenses: $50,000 10 years $10,000 $100,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider a piece of equipment that has the following cost and benefit estimates, and the interest rate is 15% per year: What is the modified B/C ratio of this equipment?

Initial investment: $200,000
Equipment life:
Salvage value:
Annual receipts:
Annual expenses: $50,000
10 years
$10,000
$100,000

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