Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 1P
To determine
Calculate the Benefit cos ratio.
Expert Solution & Answer
Explanation of Solution
Time period is denoted by n and the interest is denoted by i. Benefit cost ratio (BC)can be calculated as follows.
The benefit cost ratio is 1.27. Since the BC value is greater than 1, it is acceptable project.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
When comparing different-life alternatives by the B/C method, the alternatives should be compared over:
An engineer is considering the projects below, all of which can be last indefinitely. If the company’s MARR is 14% per year, determine which two options should be selected using B/C ratio analysis
The following estimates (in $1000 units) have been developed for a security system upgrade at Chicago’s O’Hare Airport. (a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified? (b) Determine the minimum first cost that is possible to render the project just economically unjustified. Item Cash Flow First cost, $ 13,000 AW of benefits, $ per year 3,800 FW of disbenefits, year 20, $ 6,750 M&O costs, $ per year 400 Life, years 20
Chapter 10 Solutions
Engineering Economy (17th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
Knowledge Booster
Similar questions
- Locations under consideration for a border patrol station have their costs estimated by the federal government. Use the B/C ratio method at an Interest rate of 9.00% per year to determine which location to select, if any. (Round the final answer to three decimal places.) Location Initial Cost, $ Annual Cost, $ per Year Disbenefits, $ per Year Life, Years The AB/C ratio is -928888.889 ✪ Select location. N North N 1,360,000 480,000 70,000 South S 2,900,000 400,000 45,000 0arrow_forwardThe benefits associated with a nuclear power plant cooling water filtration project located on the Ohio River are $15,000 per year forever, starting in year 1. The costs are $75,000 in year 0 and $75,000 at the end of year 2. At i= 10% per year, calculate the B/C ratio to determine if the project is justified economically. The B/C ratio will be The project is economically justified +arrow_forwardWhen a B/C analysis is conducted, the benefits and costs: (a) Must be expressed in terms of their present worth values (b) Must be expressed in terms of their annual worth values (c) Must be expressed in terms of their future worth values (d) Can be expressed in terms of PW, AW, or FWarrow_forward
- The modified B/C ratio for a city-owned hospital heliport project is 1.7. The initial cost is $0.975 million, annual benefits are $150,000, and the estimated life is 29 years. What is the amount of the annual M&O costs used in the calculation at a discount rate of 6% per year? The annual M&O costs is $arrow_forwardCalculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Item Estimate PW of benefits, $ 3,800,000 AW of disbenefits, $/year 45,000 First cost, $ 1,200,000 M&O costs, $/year 300,000 Life, years 20arrow_forwardThe benefits associated with a nuclear power plant cooling water filtration project located on the Ohio River are $12,000 per year forever, starting in year 1. The costs are $25,000 in year O and $25,000 at the end of year 2. At /= 10% per year, calculate the B/C ratio to determine if the project is justified economically. The B/C ratio will be [ The project is economically [justifedarrow_forward
- A consultant, after 3 months of work, reported that the modified B/C ratio for a city-owned hospital heliport project is 1.6. If the initial cost is $1.8 million and the annual benefits are $125,000, what is the amount of the annual M&O costs used in the calculation? The report stated that a discount rate of 7% per year and an estimated life of 35 years were used. The M&O cost is $ .arrow_forwardA rural, agriculture-based city that has 17,000 households is required to install treatment systems for the removal of arsenic and other harmful chemicals from its drinking water. The annual cost is projected to be $150 per household per year. Assume that one life will be saved every 3 years as a result of the removal systems. (a) What is the B/C ratio, if a human life is valued at $4.8 million? Use an interest rate of 8% per year and assume the life is saved at the end of each 3-year period. (b) What justifies the project?arrow_forwardUse the B/C method to compare four mutually exclusive alternatives for recycling plastic bottles. Make any additional calculations necessary to determine which alternative should be selected.arrow_forward
- Consider a piece of equipment that has the following cost and benefit estimates, and the interest rate is 15% per year: Initial investment: $200,000 Equipment life: 10 years Salvage value: $10,000 Annual receipts: $100,000 Annual expenses: $50,000 What is the modified B/C ratio of this equipment? Click the icon to view the interest and annuity table for discrete compounding when = 15% per year. Thr modified cost-benefit ratio is (Round to two decimal places.) According to the B-C ratio method, the project is More Info Single Payment Compound Amount Present Factor Worth Factor To Find F To Find P Discrete Compounding; /= 15% Compound Amount Factor To Find F Uniform Series Sinking Present Capital Recovery Worth Factor To Find P Fund Factor To Find A Factor To Find A Given P Given F Given A Given A Given F Given P N FIP P/F F/A PIA A/F A/P 1 1.1500 0.8696 1.0000 0.8696 1.0000 1.1500 2 1.3225 0.7561 2.1500 1.6257 0.4651 0.6151 3 1.5209 0.6575 3.4725 2.2832 0.2880 0.4380 4 1.7490 0.5718…arrow_forwardCalculate the modified and conventional B-C Ratio using AW in four decimal places. Is the project acceptable?arrow_forwardA consultant, after 3 months of work, reported that the modified B/C ratio for a city-owned hospital heliport project is 1.7. If the initial cost is $1 million and the annual benefits are $150,000, what is the amount of the annual M&O costs used in the calculation? The report stated that a discount rate of 6% per year and an estimated life of 30 years were used.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education