From the following data, use the conventional B/C ratio for a project that has a 20-year life to determine if it is economically justified. Use an interest rate of 8% per year. To the People Annual benefits $115,000 per year Annual disbenefits $10,000 per year = Consequences To the Government First cost = $600,000 Annual cost $33,000 per year Annual savings $30,000 per year The B/C ratio is The project is justified
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- N5 The following data is provided for a PPP project. To the People To the Government Benefits $130,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years Disbenefits $45,000 per year Savings $90,000 per year Calculate the conventional benefit/cost ratios using an interest rate of 6% per year and an infinite project period.The following data is provided for a PPP project To the People To the Government $1.8 million ndw and $200,000 every З уears $12d000 per year Benefits $95,000 per year beginning now Cost Disbenefits $35.000 per year Savings Calculate the modified benefit/cost ratios using an interest rate of 10% per year and an infinite project period. The modified B/C ratio is 07682Why are benefit cost ratios inappropriate for evaluating alternative projects?
- In a feasible set, such as the one shown here, points INSIDE the set are said to be by points ON the frontier. Least-cost abatement curve A" 30 A' A 25 Feasible set E with zero abatement 400 600 Cost of abatement (billions € = cost per tonne abated x gigatonnes abated) Environmental quality, E (amount abated, GtCO,)In a modified B/C ratio:a. disbenefits and M&O costs are subtracted from benefitsb. disbenefits are subtracted from benefits, and M&O costs are added to costsc. disbenefits and M&O costs are added to costsd. disbenefits are added to costs, and M&O costs are subtracted from benefitsIs the Benefit-cost analysis a decision-making tool for systematically developing useful information about the desirable and undesirable effects of public projects?
- Question 1 You are interested in purchasing a car from the available three options. CAR-1 CAR-2 CAR-3 First Cost 17856 23456 28678 Operating cost ($/year) Benefits ($/year) Disbenefits ($/year) Life (years) 743 589 321 435 1088 890 85 145 134 12 15 20 Use Incremental B/C analysis to determine which car is better at an interest rate of 9% per year.M ences Calculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Estimate 3,550,000 45,000 1,025,000 220,000 20 Item PW of Benefits, S AW of Disbenefits, $/year First Cost, $ M&O Costs, $/Year Life, Years The B/C ratio is The project is (Click to select)The B/C ratio for the following cash flow estimates calculated at an interest rate of 10% is .89, which means that the project is currently not justified. What would the maximum first cost be for this project to be justified? Item PW of benefits, $ AW of disbenefits, $/year First cost, $ M&O costs, $/yr Life, years Estimate 3,800,000 45,000 1,200,000 310,000 20 775,723 140,952 863,993 1,092,000
- Using the incremental B/C analysis (AB/C). Determine the best alternative, i=10% First cost O &M Cost/year Benefit/year Salvage value Life in years A 45,000 $4,000 $15,000 $9,000 B $25,000 $1,500 $9,500 $5,000 10 с $35,000 $3,000 $14,000 $7,000 D $15,000 $2,000 $8,000 $3,000Apply incremental B/C analysis at an interest rate of 8% per year to determine which alternative should be selected. Use a 20-year study period, and assume the damage costs might occur in year 6 of the study period. Alternative A Alternative B Initial cost, S 600,000 800,000 Annual M&O 50,000 70,000 costs, S/year Potential damage 950,000 250,000 costs, S. There is five alternatives for improvement of a road. Determine which alternative should be chosen if the highway department is willing to invest money as long as there is a B/C ratio of at least .00. LAlternatives Annual Benefits Annual Cost A P900, 000 P1. 000,000 B P1. 300,000 PI. 400,000 P2. 800.000 P2, 100,000 D P3, 300,000 P2, 700,000 E P1. 200,000 P3. 400,000