A county commissioner has eight projects available as summarized below. The remaining budget for the year is \(\$ 243,000\) for new projects. Operating and maintenance costs are separately funded and are not of concern. All eight have a favorable \(B / C\) ratio at the cost of capital, \(i=6\) percent. To determine how to select the projects, it has been suggested that the commissioner raise the interest rate (MARR) until only those projects remain that continue to have a \(B / C>1\) and are within the commissioner's budget limits. Use a 10-year planning horizon.

a. Which projects are selected using the suggested approach?

b. Does this approach guarantee an optimum selection of projects? Why or why not?

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O&M Residual Value Project # First Cost Cost/Year at 10 Years Benefits/Year 1 $100,800 $9,180 $49,000 $44,100 2 $82,800 $4,600 $24,500 $23,350 3 $126,000 $7,650 $36,700 $33,050 4 $117,000 $4,900 $44,400 $25,900 5 $91,800 $12,850 $49,000 $26.300 6 $104,400 $1,840 $24,500 $16,500 7 $77,400 $15,600 $9,200 $27,500 8 $57,200 $6,550 $0 $17,800