The following estimates (in $1000 units) have been developed for a security system upgrade at Chicago’s O’Hare Airport.

(a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified?

(b) Determine the minimum first cost that is possible to render the project just economically unjustified.

Item .................................................Cash Flow
First cost, $ ........................................13,000
AW of benefits, $ per year ................3,800
FW of disbenefits, year 20, $ ...........6,750
M&O costs, $ per year ........................400
Life, years ...............................................20