The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in classrooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $300,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $75,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of $55,000 for the archival value being anticipated. Interest is 5%. An estimated 80,000 persons will visit the e-zoo in the first year, increasing by 27,500 each year, and they will receive, on the average, an additional $0.70 of benefit per visit when the new area is complete. Calculate benefit-cost ratio and benefits minus costs.
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The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in classrooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $300,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $75,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of $55,000 for the archival value being anticipated. Interest is 5%. An estimated 80,000 persons will visit the e-zoo in the first year, increasing by 27,500 each year, and they will receive, on the average, an additional $0.70 of benefit per visit when the new area is complete.
Calculate benefit-cost ratio and benefits minus costs.
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