A proposal has been made for improving the downtown area of a small town. The plan calls
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Benefits:
Increased sales tax revenue.........................$400,000 per year
Increased real estate property taxes...............$300,000 per year
Benefits due to decreased air pollution............$50,000 per year
Quality of life improvements to users..............$50,000 per year
Disbenefits:
Increased maintenance $150,000 per year
a. Compute the B-C ratio of this plan based on a MARR of 8% per year and an infinite life for the project.
b. How does the B-C ratio change for a 20-year project life and a MARR of 10% per year?
MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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