Initial Cost = 208,355
Additional Cost at EOY1 and EOY2 = 23,720
Annual Benefits from EOY3 to EOY10 = 91,825 (for 8 year)
Interest Rate = 10%
Calculate the Benefit-Cost ratio.
Calculating Benefit Cost Ratio using Present Worth Method.
B/C Ratio = PW of Benefits ÷ PW of Cost
PW of Benefits = 91,825 (P/A, 10%, 8) (P/F, 10%, 2)
PW of Benefits = 91,825 (5.33493) (0.82645)
PW of Benefits = 404,861
PW of Costs = 208,355 + 23,720 (P/A, 10%, 2)
PW of Costs = 208,355 + 23,720 (1.73554)
PW of Costs = 249,522
B/C Ratio = PW of Benefits ÷ PW of Cost
B/C Ratio = 404,861 ÷ 249,522
B/C Ratio = 1.62
As the B/C Ratio > 1, Accept the Project.
With interest at 10%, what is the benefit-cost ratio for this government project? $208,355 Initial Cost...
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uestion6 0.25 pts with interest at 10%, what is the benefit-cost ratio for this government project? nitial Cost Additional costs at the end of year 1 and year 2 Benefits at end of year 1 and year so/year 2 Annual benefits at end of year 3 $101015/year through year 10 $203180 $29800/year Enter your answer as follow: 12.34
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