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Two public infrastructure projects have the economic profiles that follow: Option A Option B Operating and Maintenance Operating and Maintenance Capital Year Cost ($) Capital Benefits ($) Cost ($) Cost ($) Cost ($) Benefits ($) 2,500,000 500,000 1 2,000,000 1,000,000 500,000 10,000 70,000 90,000 90,000 90,000 90,000 90,000 100,000 100,000 50,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 2 120,000 600,000 800,000 800,000 800,000 800,000 800,000 500,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 300,000 3 4 5 6 7 8 10

Two public infrastructure projects have the economic profiles that follow: Option A Option B Operating and Maintenance Operating and Maintenance Capital Year Cost ($) Capital Benefits ($) Cost ($) Cost ($) Cost ($) Benefits ($) 2,500,000 500,000 1 2,000,000 1,000,000 500,000 10,000 70,000 90,000 90,000 90,000 90,000 90,000 100,000 100,000 50,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 2 120,000 600,000 800,000 800,000 800,000 800,000 800,000 500,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 300,000 3 4 5 6 7 8 10

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Use these data to compute for each (a) the NPV at discount rates of 10 and 5 percent, (b) the BCR at the same rates, and (c) the internal rate of return for each. Describe the facts about the projects that would dictate which criterion is appropriate, and indicate which project is preferable under each circumstance.

5. Two public infrastructure projects have the economic profiles that follow: Option A Option B Сapital Cost ($) Operating and Maintenance Cost ($) Capital Benefits ($) Cost ($) Operating and Maintenance Year Cost ($) Benefits ($) 2,000,000 1,000,000 500,000 1 2,500,000 500,000 10,000 70,000 90,000 90,000 90,000 90,000 90,000 100,000 100,000 120,000 600,000 800,000 800,000 800,000 800,000 800,000 500,000 50,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 300,000 3 4 7 8 9. 10
Transcribed Image Text:5. Two public infrastructure projects have the economic profiles that follow: Option A Option B Сapital Cost ($) Operating and Maintenance Cost ($) Capital Benefits ($) Cost ($) Operating and Maintenance Year Cost ($) Benefits ($) 2,000,000 1,000,000 500,000 1 2,500,000 500,000 10,000 70,000 90,000 90,000 90,000 90,000 90,000 100,000 100,000 120,000 600,000 800,000 800,000 800,000 800,000 800,000 500,000 50,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 300,000 3 4 7 8 9. 10
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