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The table gives annual worth values for five independent projects. The discount

ID: 2798417 • Letter: T

Question

The table gives annual worth values for five independent projects. The discount rate is 8% and the projects are projected to last 20 years. Which project (s) should be selected based on the B/C method?

Project A

Project B

Project C

Project D

AW of first cost

4,000

6,000

6,500

8,750

AW of M&O costs

8,000

9,500

8,000

11,500

AW of benefits

18,500

40,250

32,500

42,500

AW of dis-benefits

4,250

13,950

17,500

18,750

A) Only B

B) All Projects

C) Only C and D

D) Only A and B

Project A

Project B

Project C

Project D

AW of first cost

4,000

6,000

6,500

8,750

AW of M&O costs

8,000

9,500

8,000

11,500

AW of benefits

18,500

40,250

32,500

42,500

AW of dis-benefits

4,250

13,950

17,500

18,750

Explanation / Answer

A) Only B is selcted

Calculation is : AW of benifits - AW of disbenifits - AW of first cost - AW of M&O costs

Project AW based on benefit cost analysis Project A 2250 Project B 10800 Project C 500 Project D 3500
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