The following estimates (in $1000 units) have been developed for a new security system at Chicago's O'Hare Airport. First cost, S 13,000 AW of benefits, $/year FW (in year 20) of disbenefits, $ M&O costs, $/year 3,800 6,750 400 Life of project, years 20 a. Calculate the conventional B/C ratio at a dis- count rate of 10% per year. b. Determine the minimum first cost necessary to make the project economically unjustified.
The following estimates (in $1000 units) have been developed for a new security system at Chicago's O'Hare Airport. First cost, S 13,000 AW of benefits, $/year FW (in year 20) of disbenefits, $ M&O costs, $/year 3,800 6,750 400 Life of project, years 20 a. Calculate the conventional B/C ratio at a dis- count rate of 10% per year. b. Determine the minimum first cost necessary to make the project economically unjustified.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![The following estimates (in $1000 units) have
been developed for a new security system at
Chicago's O'Hare Airport.
First cost, S
13,000
AW of benefits, $/year
FW (in year 20) of disbenefits, $
M&O costs, $/year
3,800
6,750
400
Life of project, years
20
a. Calculate the conventional B/C ratio at a dis-
count rate of 10% per year.
b. Determine the minimum first cost necessary to
make the project economically unjustified.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F74c57fd3-7c33-48c1-a109-b1e78787ca0e%2F679428ac-92ab-4100-8d70-17e983b67720%2Fm4424zc.png&w=3840&q=75)
Transcribed Image Text:The following estimates (in $1000 units) have
been developed for a new security system at
Chicago's O'Hare Airport.
First cost, S
13,000
AW of benefits, $/year
FW (in year 20) of disbenefits, $
M&O costs, $/year
3,800
6,750
400
Life of project, years
20
a. Calculate the conventional B/C ratio at a dis-
count rate of 10% per year.
b. Determine the minimum first cost necessary to
make the project economically unjustified.
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