Engineering Economy, Student Value Edition (17th Edition)
Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
Question
Book Icon
Chapter 10, Problem 1P
To determine

Calculate the Benefit cos ratio.

Expert Solution & Answer
Check Mark

Explanation of Solution

Time period is denoted by n and the interest is denoted by i. Benefit cost ratio (BC)can be calculated as follows.

BC=Annual receiptAnnual expenseInvestment(i(1+i)n(1+i)n1)Salvage value(i(1+i)n1)=100,00050,000200,000(0.15(1+0.15)10(1+0.15)101)10,000(0.15(1+.15)101)=1.27   

The benefit cost ratio is 1.27. Since the BC value is greater than 1, it is acceptable project.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Not use ai please
Not use ai please
Answer for question 1
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Text book image
MACROECONOMICS FOR TODAY
Economics
ISBN:9781337613057
Author:Tucker
Publisher:CENGAGE L
Text book image
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
Text book image
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning