Question

Solve for alternative A and B

coal-powered generating facility at a cost of $19,000,000 Annual power sales are expected to be $1,100,000 per year. Annual operating and $220,000 per year. A benefit of this alternative is that it is Alternative A. Build a maintenance costs are expected to attract new industry, worth $550,000 per year, to the region. Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and operating costs are $27,000,000, $700,000, and $80,000 per year, respectively. Annual benefits of this alternative are as follows: Flood-control savings $700,000 $250,000 $50,000 Irrigation Recreation $400,000 Ability to attract new industry Print Done Problem 10-13 (algorithmic) Question Help A nonprofit government corporation is considering two alternatives for generating power. The useful life of both alternatives is 30 years. Using an interest rate of 4%, determine which alternative (if either) should be selected according to the conventional B-C-ratio method. Click the icon to view the additional information about the alternatives. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 4% per year. Perform the conventional B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative s the alternative acceptable? B-C ratio Yes A Single Payment Uniform Series Compound Compound Sinking Capital Recovery Factor Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given A PIA Given F AIF Given P AIP Given P Given F Given A N FIP PIF FIA 1 1.0400 0.9615 1.0000 0.9615 1.0000 1.0400 2 1.0816 0.9246 2.0400 1.8861 0.4902 0.5302 3.1216 0.3203 0.3603 3 1.1249 0.8890 2.7751 4 1.1699 0.8548 4.2465 3.6299 0.2355 0.2755 0.2246 1.2167 0.8219 5.4163 4.4518 0.1846 1.2653 0.7903 6.6330 5.2421 0.1508 0.1908 7 6.0021 0.1266 1.3159 0.7599 7.8983 0.1666 0.7307 6.7327 0.1485 1.3686 9.2142 0.1085 9 0.7026 7.4353 1.4233 10.5828 0.0945 0.1345 0.1233 10 1.4802 0.6756 12.0061 8.1109 0.0833 11 1.5395 0.6496 13.4864 8.7605 0.0741 0.1141 12 1.6010 0.6246 15.0258 9.3851 0.0666 0.1066 1.6651 0.6006 13 16.6268 9.9856 0.0601 0.1001 0.0947 14 1.7317 0.5775 18.2919 10.5631 0.0547 0.0899 15 1.8009 0.5553 20.0236 11.1184 0.0499 16 21.8245 0.0858 1.8730 0.5339 11.6523 0.0458 17 1.9479 0.5134 23.6975 12.1657 0.0422 0.0822 18 0.4936 25.6454 0.0390 0.0790 2.0258 12.6593 19 13.1339 2.1068 0.4746 27.6712 0.0361 0.0761 0.0736 20 2.1911 0.4564 29.7781 13.5903 0.0336 21 0.0713 2.2788 0.4388 31.9692 14.0292 0.0313 22 2.3699 0.4220 34.2480 14.4511 0.0292 0.0692 23 2.4647 0.4057 36.6179 14.8568 0.0273 0.0673 24 2.5633 0.3901 0.0256 0.0656 39.0826 15.2470 41.6459 25 2.6658 0.3751 15.6221 0.0240 0.0640 30 3.2434 0.3083 56.0849 17.2920 0.0178 0.0578 35 3.9461 0.2534 18.6646 0.0136 0.0536 73.6522 0.2083 19.7928 40 4.8010 95.0255 0.0105 0.0505 20.7200 45 5.8412 0.1712 121.0294 0.0083 0.0483 21.4822 50 7.1067 0.1407 152.6671 0.0066 0.0466 Drint Dona

Answer 1

B-C ratio present value of annual revenue/(initial cost +Present Value of annual cost) Particulars Alternative B Alternative A 1,100,000 $ 550,000 1,400,000 note 1) 1,650,000 2,100,000 Power sales A 700,000 Annual benefits from new industry Total (A+B) Annuity Factor@ 4%, 30 Years (from Table) present value of annual revenue (C x D) C 17.2920 17.2920 28,531,800 $36,313,200 E Capital Annual Maintenance cost Annuity Factor @ 4%, 30 Years present value maintenance cost (Gx H) Total cost(F+I) 19,000,000 $27,000,000 220,000 $ cost G 80,000 17.2920 17.2920 3,804,240 1,383,360 22,804,240 $28,383,360 T $ J B-C ratio (E/J) K 1.25 1.28 Is the project acceptable (both projects have BC ratio Yes Acceptable) L Yes more than 1. so both projects are more BC ratio, Alternative A should be Selected Since Alternative A has Note -1 Annual benefits from new 700000 250000+50000+400000 industry - Alternative B 1,400,000 = CA