Chapter 9 Notes ENG 303 9-45 A car dealer leases a small computer with software for $5.000 per vear. As an alternative he could buy the computer for $7,000 and lease the software for $3,500 per year. Any time he would decide to switch to some other computer system he could cancel the softwa re lease and sell the computer for $500. (a) If he buys the computer and leases the software, what is the payback period? (b) If he kept the computer and software for 6 years, what would be the benefit-cost ratio, based on an 8% interest rate? storag ta doudy wite ent ym s salled rthth Chapter 9 Notes ENG 303 9-34 A government agency is planning a new office building close to its current headquarters. Four proposed sites are to be evaluated. Any of these sites will save the agency $700,000 per year, since two of its current satellite offices will no longer need to be rented. The agency uses a 6% interest rate and assumes that the building and its benefits will last for 40 years. Based on a benefit-cost analysis what should the agency do? Site D Initial Cost $8.6M $8.1M $7.5M $6.8M Annual 0&M 0.12M 0.155M 0.2M 0.3M