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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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Topic Video
Question
Bipin
Transcribed Image Text:For a proposed bridge project, FDOT has estimated the capital investment, annual
O&M cost, net annual benefit, and salvage value under three different scenarios
(optimistic, most likely, and pessimistic). Assume the useful life of the bridge is 50
years and the interest rate is 4%, what is the estimated average B/C ratio of the
proposed project?
Capital investment
Annual O&M costs
Salvage value
Annual benefit
Optimistic
$9,562,587 $11,198,327
Most Likely
$832,774
$14,652,777
$921,233 $1,206,954
$1,600,000 $1,500,000 $1,400,000
$2,024,879
Pessimistic
$1,894,133
$1,725,432
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