Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 10, Problem 26FE
To determine
Calculated the cost benefit ratio
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What is the B/C Ratio for a firm considering an investment in a new manufacturing technology? Investment = $2,500,000 Salvage Value = $150,000 MARR = 15%
Net Annual Savings = $600,000 Project Life = 10 years
Please don't just use excel, please show steps..
A community public works project will cost $92,000 and will benefit five different individuals.
Individual
Individual Benefit ($)
Individual Cost ($)
1
4,500
6,000
2
18,500
15,000
3
19,000
17,000
4
30,000
24,000
5
29,000
30,000
Does this project meet the Pareto efficiency improvement criterion?
If possible, revise the cost shares to allow the project to meet the Pareto criterion and to pass a referendum. please use excel with formulas
M
ences
Calculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified?
Estimate
3,550,000
45,000
1,025,000
220,000
20
Item
PW of Benefits, S
AW of Disbenefits, $/year
First Cost, $
M&O Costs, $/Year
Life, Years
The B/C ratio is
The project is (Click to select)
Chapter 10 Solutions
Engineering Economy, Student Value Edition (17th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
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- A tire company will purchase a new tire balancing equipment. The machine will cost $12,699 with an annual savings of $1,500, a salvage value of $250 at the end of 12 years and the MARR of 6%. Use B/C analysis to determine whether or not the equipment should be purchased. B/C=?arrow_forwardA state is planning to construct a stretch of highway extending to 60 Kilometer. The state signed a contract based on the BOT option (Build, Operate, and Transfer) with a construction company. The construction company will finish the project in two years (30 kilometers per year), after which it will operate the highway for 25 years. The company generates revenues by collecting a flat fees from the cars using the highway. The following information is available: Cost/Kilometer: 1,000,000 S Number of cars using the highway: 500,000 car for the first year of usage, then increase by 5% a year. - Annual operation cost: 100,000 $ for the first year of usage, then increase by 10,000 $ every year. The company's MARR is 8% per year. Calculate the value of the fee charged/car so that the Net Present worth of the project is 25,000,000 S.arrow_forwardCalculate the modified and conventional B-C Ratio using AW in four decimal places. Is the project acceptable?arrow_forward
- A local government is considering promoting to urism in the city. It will cost$8,000 to develop a plan. The anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, rest room. $50,000patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?arrow_forwardIn computing the B/C ratio, is the annual revenue counted as benefits? Please compute the B/C ratio of MEA 5 and show your solution (not in excel). and explain MARR=12%arrow_forwardThe following data are for two mutually exclusive projects: PW(benefits) PW(operating and maintenance costs) PW(capital costs) Project A $20,000,000 $5,000,000 $5,000,000 Project B $15,500,000 $8,000,000 $1,000,000 (a) What is the benefit-cost ratio for Project A (to two decimal points): Number (b) What is the benefit-cost ratio for Project B (to two decimal points): Number (c) What is the modified benefit-cost ratio for Project A (to two decimal points)? Number (d) What is the modified benefit-cost ratio for Project B (to two decimal points)? Number (e) What is the benefit-cost ratio for the increment between projects (to two decimal points)? Number (f) What is the Present Worth of Project A? Number (g) What is the Present Worth of Project B? Number (h) Which is the preferred project (enter either 'A' or 'B')?arrow_forward
- 5,6,7 search Saved Help S GEarrow_forwardThere have been several variances in the cost and schedule estimates on your project, and the original estimating assumptions are no longer valid. The variances will likely continue until the end of the project. Calculate the SPI. BAC = $1,000,000 EV = $200,000 PV = $4000,000 AV = $150,000 a. 0.2 b. 0.5 c. 1.333 d. 1arrow_forward1)what is the best project based on simple payback 2) What is the best project based on discounted payback 3)What is beta B/C ratio 4) What is gammas B/C ratioarrow_forward
- Comparison of five mutually exclusive alternatives is shown. One must be accepted. According to the B/C ratio, which alternative should be selected (costs increase from A to E). AB/C Comparison Ratio A versus B 0.75 B versus C 1.4 C versus D 1.3 A versus C 1.1 A versus D 0.2 B versus D 1.9 C versus E 1.2 D versus E 0.9 O a. B O b. D Ос. А O d. E O e. Carrow_forwardA college student determines he will have only half of the cost for university housing available for the coming year. List five feasible alternatives.arrow_forwardRespond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.arrow_forward
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