Question

15 (15 points The City of Coral Gables is going to undertake a beautification project the UM campus at a cost of $100,000. They expect to realize benefits of 10 000 in vear 0 and $30,000 in year 3. The Disbenefits of the project will occur er $7,000. The City of Coral Gables will save $25.000 in vears 1-4 The project life is 5 years and the MARR is 6%. What is the 0%. What is the conventional B/C ratio?

Answer 1

B/C ratio =

1.22

Workings

Year	Initial cost	Benefits	Disbenefits	Savings	PV of costs	PV of benefits
0	-100000	20000			-100000	20000
1				25000		23584.91
2				25000		22249.91
3			-7000	25000	-5877.33	20990.48
4				25000		19802.34
5		30000				22417.75
				Total	-105877	129045.4
				B/C ratio =	1.22

Book1 - Excel - 2 X Comments Help Tell me what you want to do AutoSave on 2 H File Home Insert Draw to Calibri 11 BIU - - Page Layout Formulas AA === - A- Sign in 7 Share E.47 Data Review View n as General - $ -% ) 0 Insert Delete- Format % Cell Styles 5. 27 0 Paste LG Conditional Format as Formatting - Table Styles . Sort & Find & Filter - Select Editing Clipboard Font Alignment Nurnber Cells H A1 fc Year A B C D E 1 Year initial cost Benefits Disbenefits Savings 20 - 100000 20000 3 1 25000 4 2 25000 -7000 25000 25000 30000 F G PV of costs PV of benefits =B2/1.06^A2 =C2/1.064A2 =E3/1.064A3 =E4/1.06^A4 =D5/1.06^A5 =E5/1.06 A5 =E6/1.06^A6 =C7/1.06 A7 Total =SUM(F2:F7) =SUM(G2G7) B/C ratio = =G9/-F9