Use Scenario 1 to answer questions 1A, 1B, and 1C (2-4 below).
Scenario 1: Traffic congestion on Riverview Boulevard must be addressed. Adding right-turn lanes will cost $12.9 million (today) with an annual net benefit from reduced congestion of $1.6 million (at the end of each year). The plan is being evaluated at a MARR of 10% over the next 15 years.
1B. Calculate the "C" for the B/C ratio (i.e. calculate the denominator for the B/C ratio). (note: enter your answer in millions of dollars; do not include dollar signs, percentage signs, or spaces).
b/c ratio is the proportion of present value of benefits to present value of costs
If the present value of cost is higher than benefit than B/C ratio will < 1 and project should not be accepted.
If the present value of benefit is higher than cost the B/C ratio >1 and project is recommendable.
(1B) present value of Cost is the cash outflow occurring at the present date.it is already in its present value and does not require to be discounted.
C in B/C is the cost of investment
$12.9 million
=12,900,000
Use Scenario 1 to answer questions 1A, 1B, and 1C (2-4 below). Scenario 1: Traffic congestion...
Use Scenario 1 to answer questions 1A, 1B, and 1C below (2 - 4). Scenario 1: Newmont Mining Company is considering investing in a piece of land that may be purchased for $610,000 (today) to be open pit-mined for copper for the next 10 years. The mine is expected to produce income of $200,000 at the end of each year for 10 years. At the end of 10 years, the land will be restored in line with federal law requirements...