Question

v) Given the following benefit-to-cost ratio (BCR) information, choose the best option. Benefits Costs Option PW PW BCR 2,000 2345 0.852878 B 4,500 3456 1.302083 C 6,500 4576 1.420455 D 8,000 6543 1.222681 E 11,000 8756 1.256281 a) Option A b) Option B c) Option C d) Option D. e) Option E. vi) For the following series of future cash flows, what is the simple payback? end of year FV -65,000 -98,100 -1,619 31.416 35,000 36,500 37.500 7 38,000 38.000 32,000 10 25,000 a) 3 years. b) 5 years c) 7 years d) 10 years e) Never

thank you

Answer 1

v)	Correct Option: C
	Since BCR for option c is higher than others.
vi)
	Year	Cash Flow	Cumulative Cash flows
	0	-65000	-65000
	1	-98100	-163100
	2	-1619	-164719
	3	31416	-133303
	4	35000	-98303
	5	36500	-61803
	6	37500	-24303
	7	38000	13697
	8	38000	51697
	9	32000	83697
	10	25000	108697
	In year 7, negative cash flow became positive hence payback period is year 7.
	Correct Option: C

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