Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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As part of the rehabilitation of the downtown area of a southern U.S. city, the Parks and
Recreation Department expects to develop the space below several over passes into
basketball, handball, miniature golf, and tennis courts. The estimates are initial cost of
$193,000; life of 20 years and, annual M&O costs of$18,000. The department expects
16,000 people per year to use the facilities an average of 2 hours each. The value of the
recreation has been conservatively set at $1 per hour. At a discount rate of 9% per year,
what is the B/C ratio for the project?
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