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Using the benefits and costs data below for Project 1, 2 and 3, conduct a Conventional Incremental B/C Ratio Analysis for Project 1 and Project 2. With a given annual interest rate of 8%, select the correct Incremental B/C ratio. All Projects have Infinite Life Project 1 Project 2 Project 3 First cost -1,000,000 -1,500,000 -2,500,000 Annual Cost -60,000 -45,000 -30,000 Annual Benefits 200,000 250,000 360,000 Annual dis-benefits -50,000 -60,000 -75,000

Using the benefits and costs data below for Project 1, 2 and 3, conduct a Conventional Incremental B/C Ratio Analysis for Project 1 and Project 2. With a given annual interest rate of 8%, select the correct Incremental B/C ratio. All Projects have Infinite Life Project 1 Project 2 Project 3 First cost -1,000,000 -1,500,000 -2,500,000 Annual Cost -60,000 -45,000 -30,000 Annual Benefits 200,000 250,000 360,000 Annual dis-benefits -50,000 -60,000 -75,000

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Using the data from Problem 7 above, conduct a Conventional Incremental B/C Ratio Analysis for project 2 and 3. With a given annual interest rate of 8%, select the correct Incremental B/C ratio.  The data from problem 7 you can find it in the first picture, please answer this asap.

### Project Benefit-Cost (B/C) Ratio Analysis #### Background Using the benefits and costs data provided for Projects 1, 2, and 3, we need to perform a Conventional Incremental Benefit-Cost (B/C) Ratio Analysis for Project 1 and Project 2. Given an annual interest rate of 8%, the goal is to select the correct Incremental B/C ratio. #### Data Overview All projects discussed have an infinite life. The data is summarized in the table below: | Project | First Cost | Annual Cost | Annual Benefits | Annual Dis-benefits | |------------|------------|-------------|-----------------|---------------------| | Project 1 | -1,000,000 | -60,000 | 200,000 | -50,000 | | Project 2 | -1,500,000 | -45,000 | 250,000 | -60,000 | | Project 3 | -2,500,000 | -30,000 | 360,000 | -75,000 | #### Explanation - **First Cost**: Initial investment required for each project. - **Annual Cost**: Yearly expenses associated with maintaining each project. - **Annual Benefits**: Yearly returns gained from each project. - **Annual Dis-benefits**: Yearly negative impacts or losses incurred due to each project. The Incremental B/C ratio is calculated to assess the feasibility and potential return of investing in Project 1 versus Project 2, considering the costs, benefits, and an interest rate of 8%.
Transcribed Image Text:### Project Benefit-Cost (B/C) Ratio Analysis #### Background Using the benefits and costs data provided for Projects 1, 2, and 3, we need to perform a Conventional Incremental Benefit-Cost (B/C) Ratio Analysis for Project 1 and Project 2. Given an annual interest rate of 8%, the goal is to select the correct Incremental B/C ratio. #### Data Overview All projects discussed have an infinite life. The data is summarized in the table below: | Project | First Cost | Annual Cost | Annual Benefits | Annual Dis-benefits | |------------|------------|-------------|-----------------|---------------------| | Project 1 | -1,000,000 | -60,000 | 200,000 | -50,000 | | Project 2 | -1,500,000 | -45,000 | 250,000 | -60,000 | | Project 3 | -2,500,000 | -30,000 | 360,000 | -75,000 | #### Explanation - **First Cost**: Initial investment required for each project. - **Annual Cost**: Yearly expenses associated with maintaining each project. - **Annual Benefits**: Yearly returns gained from each project. - **Annual Dis-benefits**: Yearly negative impacts or losses incurred due to each project. The Incremental B/C ratio is calculated to assess the feasibility and potential return of investing in Project 1 versus Project 2, considering the costs, benefits, and an interest rate of 8%.
**Analysis Prompt for Incremental B/C Ratio** Using the data from Problem 7 above, conduct a Conventional Incremental Benefit/Cost (B/C) Ratio Analysis for projects 2 and 3. With a given annual interest rate of 8%, select the correct Incremental B/C ratio from the options below: - ○ 1.32 - ○ 0.78 - ○ 1.24 - ○ 1.46 **Instructions:** 1. Review the data provided in Problem 7 related to projects 2 and 3. 2. Apply the conventional formula to compute the Incremental B/C ratio. 3. Incorporate the given interest rate of 8% in your calculations. 4. Evaluate the options and select the correct Incremental B/C ratio.
Transcribed Image Text:**Analysis Prompt for Incremental B/C Ratio** Using the data from Problem 7 above, conduct a Conventional Incremental Benefit/Cost (B/C) Ratio Analysis for projects 2 and 3. With a given annual interest rate of 8%, select the correct Incremental B/C ratio from the options below: - ○ 1.32 - ○ 0.78 - ○ 1.24 - ○ 1.46 **Instructions:** 1. Review the data provided in Problem 7 related to projects 2 and 3. 2. Apply the conventional formula to compute the Incremental B/C ratio. 3. Incorporate the given interest rate of 8% in your calculations. 4. Evaluate the options and select the correct Incremental B/C ratio.
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