please do it all or leave it Question 1 (1 point) When using the benefit cost ra

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please do it all or leave it

Question 1 (1 point) When using the benefit cost ratio method of analyzing a project, which of the following is a true statement? O It will always produce a recommendation consistent with present worth, future worth, and annual worth (periodic equivalent) methods It will always produce a recommendation consistent with the simple payback period method It can be used only to evaluate projects from the public sector (such as bridges and roadways) None of the above Save Question 2 (1 point) A company is considering the purchase of a new machine. The machine will cost $14,000, will result in an annual savings of $1750 with a salvage value of $500 at the end of 12 years. For a MARR of 796, what is the benefit to cost ratio? 8.25 O 1.01 O 1.36 O 0.63 Save Question 3 (1 point) Tucson wants to build a new bypass between two major roads that will cut travel time for commuters. The road will cost $14,000,000 and save 17,500 people $100/year on gas. The road will need to be resurfaced every year at a cost of $7500. The road is expected to be used for 20 years. If the cost of money is 8% was is the BCR? O 0.73 O 1.22 O 1.01 0.95 Save

Explanation / Answer

1) BCR can be used to evaluate projects from public sector

2) Benefit can be computed using PV function

N = 12, I/Y = 7%, PMT = 1750, FV = 500 => Compute PV = 14,121.71

=> BCR = 14,121.71 / 14,000 = 1.01

3) N = 20, I/Y = 8%, PMT = 17,500 x 100 - 7,500 = 1,742,500, FV = 0 => Compute PV = 17,108,122

=> BCR = 17,108,122 / 14,000,000 = 1.22

4) Let's calculate the annualized cost of periodic rebuilding using PMT function

N = 10, I/Y = 2%, PV = 0, FV = 10 => Compute PMT = $0.91

PV of benefit can be calculated using PV function

N = 50, I/Y = 2%, PMT = 10.5 - 0.91 - 0.5 = 9.19, FV = 0 => Compute = $285.54

BCR = 285.54 / 400 = 0.71

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