Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 75 years, and the sponsoring agency's MARR is 12% per year. Annual benefits to thepublic have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging trackAlternativeInitial cost$56,000Annual benefits $9,000B-C ratio1.34B$61,000$11,0001.50C$50,000$7,0001.17D$145,000$19,0001.09Perform the incremental B-C Analysis. Fill-in the table below (Round to two decimal places.)AlternativeCInc. B-C ratioIs the alternative acceptable?1.17Yes

Number of years = 75MARR = 12%Number of projects = 4To find: Best alternative using incremental B-C…

Answered: Four mutually exclusive projects are…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 15P

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Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 75 years, and the sponsoring agency's MARR is 9% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. Alternative A В Initial cost $56.000 $61,000 $10,500 $155,000 $20,000 $53,000 Annual benefits S8,500 $7,000 B-C ratio 1.68 1.91 1.43 1.47 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative Inc. B-C ratio Is the alternative acceptable? D 1.47 Yes
Six sites have been identified for a parking lot in downtown Blacksburg. Because the sites are plots of land, their salvage value and investment cost are identical. A 10-year study period has been specified, and the MARR is 17% per year. Which site should be chosen based on the IRR criterion? Click the icon to view the alternatives description More Info Investment cost (thousands) Annual revenue minus expense (thousands) IRR on total investment A $120 $17 14.2% B $170 $39.5 23.2% C $280 $52 18.6% Print Done D $420 $84.5 20.1% E $520 $104,5 20.1% $650 $138.5 21.3% - X
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