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Question 13 15 points Save An The two ME alternatives shown are under consideration for facility improvements in a company in
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Answer #1
Alt X PV @ 10% Alt Y PV @ 10%
First Cost 40000 -40000 90000 -90000
O&M Cost 50000 -1,89,539.34 20000 -75,815.74
Benefits 120000 1,13,723.60 150000 5,68,618.02
Disbenefits 30000 -1,13,723.60 10000 -37,907.87
Life 5 5
Total Benefits 1,13,723.60 5,68,618.02
Total Costs -3,43,262.94 -203723.60
BC Ratio 0.33130172 2.791124871
PV Annuity Factor 3.7908 3.7908
Annual Total Cost -90551.89923 -53741.77327

a) Total Annual cost of Alternative X is -90551.90

b) Total Annual cost of Alternative Y is -50741.77

c) BC Ratio of X is 0.3313

d) BC Ratio of Y is 2.7911

e) Incremental BC Ratio is 0.815

Alt X Alt Y Incremental PV @ 10%
First Cost 40000 90000 -50000 -50000
O&M Cost 50000 20000 30000 1,13,723.60
Benefits 120000 150000 -30000 -1,13,723.60
Disbenefits 30000 10000 20000 75,815.74
Life 5 5
Incremental Benefits -1,13,723.60
Incremental Costs 1,39,539.34
BC Ratio 0.814993136

f) The incremental ratio is less than 1 so Alternative X should be discarded and Y should be chosen.

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Question 13 15 points Save An The two ME alternatives shown are under consideration for facility improvements in a company in Abu Dhabl. Determine which one should be selected based on a B/c anal...
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