Problem 09.010 Benefit/Cost Analysis of a Single Project The estimated annual cash flows for a proposed...

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Problem 09.010 Benefit/Cost Analysis of a Single Project The estimated annual cash flows for a proposed municipal government

business economics

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Answer 1

Answer #1

B/C ratio = Benefits/Cost

Benefits = (910000-230000)/9%

= 7555555.55

Cost = 800000/9% = 8888888.88

B/C ratio = 7555555.55/8888888.88 = 0.85

The project is economically not justified

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Answer 2

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