Relex LLC is investing in a new printer that costs 100,000. The new printer would generate...
Relex LLC is investing in a new printer that costs 100,000. The new printer would generate cash flow savings of 100,000 for each of the next three years. Reflex uses a 15% discount rate. What is the benefit cost ratio?
Homework Answers
Here Benefit cost ratio is 2.2832 or 2.28 rounded off to two decimals
Calculated as
Present Value of Savings for three year = Cash inflows per year x PV factor for 3 years @ 15%
= $100000 x 2.2832 = $228320
Value of investment = $100000
Benefit cost ratio = Present value of inflows/Cost of investment = $228320/100000 = 2.2832 or 2.28
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