Homework Answers
First Cost=I=$800
Annual Benefit=AB=$120
Salvage Value=S=$500
AW(I)-AW(S)=800*(A/P,0.08,8)-500*(A/F,0.08,8)
Let us calculate interest factors
AW(I)-AW(S)=800*0.174015-500*0.094015=$92.2045
B-C ratio=AB/(AW(I)-AW(S))=120/92.2045=1.30
Correct option is
1.30
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