Two alternative plans have been put forward for the construction of a new water treatment plant...

  

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Two alternative plans have been put forward for the construction of a new water treatment plant in a town in Victoria. It has been decided to adopt the benefit to cost ratio as the method to decide upon the successful project. Given that the economic life of the water treatment plant is set at 30 years and the interest rate set at 8% use the information in the table below to calculate Benefit Cost Ratio for each plan. Initial Cost Annual Costs Annual Benefit Plan I $40,000,000 $250,000 $4,000,000 Plan II $30,000,000 $150,000 $2,500,000 BCR for Plan 1 = 1.5 and BCR for Plan II = 2.5 BCR for Plan I = 0.10 and BCR for Plan II = 0.083 BCR for Plan I = 16 and BCR for Plan II = 16.66 O BCR for Plan I = 1.051 and BCR for Plan II = 0.888 Two alternative plans have been put forward for the construction of a new water treatment plant in a town in Victoria. It has been decided to adopt the benefit to cost ratio as the method to decide upon the successful project. Given that the economic life of the water treatment plant is set at 30 years and the interest rate set at 8% use the information in the table below to calculate Benefit Cost Ratio for each plan. Initial Cost Annual Costs Annual Benefit Plan I $40,000,000 $250,000 $4,000,000 Plan II $30,000,000 $150,000 $2,500,000 BCR for Plan 1 = 1.5 and BCR for Plan II = 2.5 BCR for Plan I = 0.10 and BCR for Plan II = 0.083 BCR for Plan I = 16 and BCR for Plan II = 16.66 O BCR for Plan I = 1.051 and BCR for Plan II = 0.888

Answer rating: 100% (QA)

i8 008 BC Annual Benefit Total annual Cost Plan I BC 3 BC ... View the full answer