COMPLETE USING EXCEL In 2. (25 points) You are analyzing consultation with y Val

Question

COMPLETE USING EXCEL In 2. (25 points) You are analyzing consultation with y Value). ng various programs to reduce water pollution from poultry operations. programs our staff, you have developed the following matrix of effects (wher TAX 80 15 1,500 1.2 67 STANDARD STANDARD STANDARD POLLUTION PV TOTAL COST (S MILLION) ANNUAL PLANT COSTS (S MILLION) FOOD PROCESSING JOBS LOST TONS OF BOD REDUCED (MILLIONS) S/TON OF BOD REMOVED 225 22.5 2,200 1.5 150 150 50 1,650 1,200 0.8 60 80 70 100 130 PV TOTAL BENEFITS (S MILLION) present value of each alternative? Which alternative has the highest net benefits? efit-cost ratio for each alternative. Which alternative has the highest benefit-cost a. What is the net of e ratio? c. Which alternative gives the "biggest bang for the buck" -that is, has the lowest cost per ton of pollution removed?

Explanation / Answer

Standard A Standard B Standard C Pollution Tax PV Total Cost ($ Million) 50 60 225 80 Annual Plant Cost ($ Million) 5 7 22.5 15 Food processing jobs lost 1200 1650 2200 100 Tons of BOD reduced (Millions) 0.8 1 1.5 1.2 $/Ton of BOD removed 60 70 150 67 PV Total Benefits ($ Million) 80 100 150 130 Total amount of BOD reduced ($ Million) 48 70 225 80.4 (a) Calculation of Net Present Value will require Discount rate, which is not mentioned here. So NPV can not be calculated. (b) Formula C3/C8 D3/D8 E3/E8 F3/F8 Cost Benefit Ratio 0.63 0.60 1.50 0.62 Standard B has the highest Benefit - Cost ratio © Cost per ton of pollution removed 60 70 150 67 As seen from the table, Standard A has the lowest cost per ton of pollution removed

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