Homework Answers
Answer – B. The modified B-C ratio for the flood control project is 2.36
Life of the project = 19 years
Initial investment = $56,000
Annual maintenance costs = $4,000
Benefits starts from 3rd year up to 19th year = $25,000 (for 17 years)
MARR = 10%
Calculate Modified B-C Ratio
Modified B-C Ratio (using PW Method)
= PW of Benefits – PW of Annual Maintenance Cost ÷ Initial Investment
PW of Benefits
PW of Benefits = $25,000 (P/A, 10%, 17) (P/F, 10%, 2)
PW of Benefits = $25,000 (8.0216) (0.8264) = $165,726.256
PW of Maintenance Cost
PW of Annual Cost = $4,000 (P/A, 10%, 19)
PW of Annual Cost = $4,000 (8.3649) = $33,459.6
Modified B-C Ratio (using PW Method) = ($165,726.256 – $33,459.6) ÷ $56,000
Modified B-C Ratio (using PW Method) = $132,266.656 ÷ $56,000
Modified B-C Ratio (using PW Method) = $132,266.656 ÷ $56,000
Modified B-C Ratio (using PW Method) =2.36
Add Answer to:
A flood control project with a life of 19 years will require an investment of $56,000...
A state government is considering construction of a flood control dike having a life span of...
A state government is considering construction of a flood control dike having a life span of 21 years. History indicates that a flood occurs every 7 years and causes $750,000 in damages, on average. If the state uses a MARR of 10% per year and expects every public-works project have a B-C ratio of at least 1.0, what is the maximum investment that will be allowed for the dike? Assume that the flood occurs in the middle of each 7-year...
The B/C ratio for a flood control project along the Swanee River was calculated to be...
The B/C ratio for a flood control project along the Swanee River was calculated to be 1.5. If the benefits were $450,000 per year and the maintenance costs were $221,000 per year, determine the initial cost of the project at an interest rate of 7% per year and a 50-year life. The initial cost of the project is
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city...
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost investment cost) of $140,000. Annual maintenance expenses are expected to be $6,000 for the first 25 years and $10,000 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 8% per year, what is the capitalized cost of this project? Click the icon to view...
A city is spending $19.5 million on a new sewage system. The expected life of the...
A city is spending $19.5 million on a new sewage system. The expected life of the system is 50 years, and it will have no market value at the end of its life Operating and maintenance expenses for the system are projected to average $0.4 million per year. If the city's MARR IS 11% per year, what is the capitalized worth of the system? The study period is 100 years. Click the icon to view the interest and annuity table...
A company is considering replacing a machine that was bought six years ago for $45,000. The...
A company is considering replacing a machine that was bought six years ago for $45,000. The machine, however, can be repaired and its life extended five more years. If the current machine is replaced, the new machine will cost $43,000 and will reduce the operating expenses by $5,500 per year. The seller of the new machine has offered a trade-in allowance of $15,000 for the old machine. If MARR is 8% per year before taxes, how much can the company...
Determine the FW of the following engineering project when the MARR is 17% per year. Is...
Determine the FW of the following engineering project when the MARR is 17% per year. Is the project acceptable? Investment cost Expected life Market (salvage) value Annual receipts Annual expenses Proposal A $9,500 6 years -$1,100 $7,000 $4,000 A negative market value means that there is a net cost to dispose of an asset. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 17% per year. The FW of the following engineering...
Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of...
Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $30,000 to purchase equipment. The equipment will have a residual value at the end of its life of $2,000. The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of S24 000 per year for each of the four years. o nes required rate of return is 14% The net present value of this...
Written solution please 5- The Nile Basin countries are considering three flood control projects in Ethiopia....
Written solution please
5- The Nile Basin countries are considering three flood control projects in Ethiopia. Project A is a dam. The dam will have recreation and irrigation benefits as well as the flood control benefits. Projects B and C consist of permanent dikes along the river. Facts about the three projects are shown in the following table. Each project has a life of 25 years. The MARR is 10%. Use (a) BCR & (b) IRR method to choose the...
2. In a proposed flood control project, there are two possible sites, A and B, for...
2. In a proposed flood control project, there are two possible sites, A and B, for a dam and storage reservoir. One or the other of these sites may be used but not both. Certain channel improvement is also considered; this will increase the capacity of the stream to carry flood discharge. Estimated first costs, lives, and annual operation and maintenance costs are as follows: Site A Site B Channel Improvement First cost $6,000,000 $8,000,000 $1,000,000 Life 75 years 75...
Three sites (A, B & C) are being considered for flood control dams. The three construction...
Three sites (A, B & C) are being considered for flood control dams. The three construction costs are $10 million, $12 million and $20 million; and the annual maintenance costs are expected to be $15,000, $20,000 and $23,000 respectively for sites A, B and C. In addition, a $75,000 refurbishing expenditure will be required every 10 years at each site. Every year without the dams, $2 million in flood damage occurs. It is projected that dam A, by itself, would...
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost investment cost) of $140,000. Annual maintenance expenses are expected to be $6,000 for the first 25 years and $10,000 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 8% per year, what is the capitalized cost of this project? Click the icon to view...
A city is spending $19.5 million on a new sewage system. The expected life of the system is 50 years, and it will have no market value at the end of its life Operating and maintenance expenses for the system are projected to average $0.4 million per year. If the city's MARR IS 11% per year, what is the capitalized worth of the system? The study period is 100 years. Click the icon to view the interest and annuity table...
A company is considering replacing a machine that was bought six years ago for $45,000. The machine, however, can be repaired and its life extended five more years. If the current machine is replaced, the new machine will cost $43,000 and will reduce the operating expenses by $5,500 per year. The seller of the new machine has offered a trade-in allowance of $15,000 for the old machine. If MARR is 8% per year before taxes, how much can the company...
Determine the FW of the following engineering project when the MARR is 17% per year. Is the project acceptable? Investment cost Expected life Market (salvage) value Annual receipts Annual expenses Proposal A $9,500 6 years -$1,100 $7,000 $4,000 A negative market value means that there is a net cost to dispose of an asset. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 17% per year. The FW of the following engineering...
Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $30,000 to purchase equipment. The equipment will have a residual value at the end of its life of $2,000. The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of S24 000 per year for each of the four years. o nes required rate of return is 14% The net present value of this...
Written solution please
5- The Nile Basin countries are considering three flood control projects in Ethiopia. Project A is a dam. The dam will have recreation and irrigation benefits as well as the flood control benefits. Projects B and C consist of permanent dikes along the river. Facts about the three projects are shown in the following table. Each project has a life of 25 years. The MARR is 10%. Use (a) BCR & (b) IRR method to choose the...
Most questions answered within 3 hours.
-
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 3 minutes ago -
A three-year maturity bond with a 12% annual coupon rate is
currently traded at par $1000...
asked 12 minutes ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 22 minutes ago -
1.
What is the minimum volume to use in the Spec 20 cuvette in order
to...
asked 48 minutes ago -
A builder wants to install wall-to-wall carpeting in a living
room of length 8.87 m and...
asked 40 minutes ago -
Organizational change can produce anxiety in those affected by
the change. In what ways can change...
asked 43 minutes ago -
Ozone in the atmosphere may react with nitric oxide.
From the following data, calculate the DG...
asked 48 minutes ago -
Steven Long, a bond analyst, is analyzing a convertible bond.
The characteristics of the bond are...
asked 47 minutes ago -
Michael Bordellet is
the owner/pilot of Stellar Air Service. The company flies a daily
round trip...
asked 49 minutes ago -
Hi, I need to change the conversion where stack is into a class
stack and add...
asked 1 hour ago -
Consider the log logistic CDF F(t)=1/(1+(t/α)-β)
Find f(t), S(t), h(t), and H(t).
It can be shown...
asked 1 hour ago -
A gaseous mixture of methane and water vapor at
atmospheric pressure and 500 ° C is...
asked 1 hour ago