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Question 18 7 pts At 10% interest, what is the conventional benefit/cost ratio for the following government project using PW? Initial cost-$200,000 Additional costs at end of Years 1 and 2 $30,000 Benefits at end of Years 1 and 2 $0 Annual benefits of end of Years 3 to 10 $90,000

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Answer #1

Equivalent worth of Benefits- Equivalent worth of Disbenefits Equivalent worth of total cost - Equivalent worth of salvagevalue Convention al B/C ratio

=(90000*(1/1.1^3+1/1.1^4+1/1.1^5+1/1.1^6+1/1.1^7+1/1.1^8+1/1.1^9+1/1.1^10))/(200000+30000/1.1+30000/1.1^2)
=1.574240517

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