P/F for 45years =13.6055 from the table Question is answer ANSWER(C) YES OR NO t

Question

P/F for 45years =13.6055 from the table

Question is answer ANSWER(C) YES OR NO

then ANSWER (B) and YES OR NO

thenANSWER (A) and YES OR NO

A state-sponsored Forest Management Bureau is evaluating alternative routes for a new road into a formerly inaccessible region. Three mutually exclusive plans for routing the road provide different benefits, as indicated in table below. The roads are assumed to have an economic life of 45 years, and MARR is 7% per year. Which route should be selected according to the B-C ratio method? Assume that a roadway must be constructed Construction Costs S310,000 215,000 160,000 Annual Maintenance Annual Savings in Annual Recreational Benefit $5,500 6,500 2,500 Annual Timber Route Fire Damage Cost $4,500 3,000 1,600 Access Benefit $2,500 1,300 $12,000 8,000 4,000 500 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year Perform the incremental B-C Analysis. Fil-in the table below. (Round to four decimal places.) Alternative Inc. B-C ratio Is the alternative acceptable?

Explanation / Answer

Answer:

Project A :

(B/C) = [20000]÷[310,000(A/P,7%,45)+ 4500]

= (20000÷2,7285) = 0.733> 1: Invalid project- Not acceptable

Project B:

(B/C) = [15,800]÷[215,000(A/P,7%,45)+ 3000]= (15,800÷18802.5) = .8403> 1:Invalid project- Not acceptable

Project C:

(B/C) = [7000]÷[160,000(A/P,7%,45)+ 1600]= 7000÷13360) = .523 > 1:Invalid project- Not acceptable.

Route Annual Savings in Fire Damage Annual Recreational Benefit Annual Timber Access Benefit Total Benefit A B C A+B+C A 12000 5500 2500 20000 B 8000 6500 1300 15800 C 4000 2500 500 7000

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