Consider the following investment opportunity: Initial cost $100,000 Additional cost at end of Year 1 150,000 Benefit

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Consider the following investment opportunity:

Initial cost                                                        $100,000

Additional cost at end of Year 1                     150,000

Benefit at end of Year 1                                               0

Annual benefit per year at end                        20,000                                 

Of Years 2-10             

With interest at 7%, what is the benefit-cost ratio for this project?

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