The following estimates (in $1000 units) have been developed for a security system upgrade at Chicago's O'Hare Airport. (a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified? (b) Determine the minimum first cost that is possible to render the project just economically unjustified. The lifespan of the project is 20 years. Item Cashflow First Cost 13000
The following estimates (in $1000 units) have been developed for a security system upgrade at Chicago's O'Hare Airport. (a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified? (b) Determine the minimum first cost that is possible to render the project just economically unjustified. The lifespan of the project is 20 years. Item Cashflow First Cost 13000
Chapter1: Making Economics Decisions
Section: Chapter Questions
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![7. The following estimates (in $1000 units) have been developed for a security
system upgrade at Chicago's O'Hare Airport. (a) Calculate the conventional
B/C ratio at a discount rate of 10% per year. Is the project justified? (b)
Determine the minimum first cost that is possible to render the project just
economically unjustified. The lifespan of the project is 20 years.
Item
Cashflow
First Cost
13000
AW Benefits
3800
FW of Disbenefits, yr20
6750
M&O Costs per yr
400](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffdcc255c-473d-4dc1-bf6d-70bc0f52e388%2F5d841707-174a-4457-876b-e0103fa538ec%2F5zeu2no_processed.png&w=3840&q=75)
Transcribed Image Text:7. The following estimates (in $1000 units) have been developed for a security
system upgrade at Chicago's O'Hare Airport. (a) Calculate the conventional
B/C ratio at a discount rate of 10% per year. Is the project justified? (b)
Determine the minimum first cost that is possible to render the project just
economically unjustified. The lifespan of the project is 20 years.
Item
Cashflow
First Cost
13000
AW Benefits
3800
FW of Disbenefits, yr20
6750
M&O Costs per yr
400
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