8s.1 A city is trying to decide whether to build a parking garage. An engineering plan calculates that it takes a year to build at a cost of $2 million and $200,000 per year to operate. An in-depth analysis of operating revenue determines that the garage will start to earn revenues of $500,000 per year in the second year. The city is interested in knowing whether this project will be profitable (BC > 1) over the next eight years (counting the year of construction) at 10%. The project's B/C ratio over the eight-year period is closest to а. 0.77 b. 0.87 с. 1.33 d. 2.50

8s.1 A city is trying to decide whether to build a parking garage. An engineering plan calculates that it takes a year to build at a cost of $2 million and $200,000 per year to operate. An in-depth analysis of operating revenue determines that the garage will start to earn revenues of $500,000 per year in the second year. The city is interested in knowing whether this project will be profitable (BC > 1) over the next eight years (counting the year of construction) at 10%. The project's B/C ratio over the eight-year period is closest to а. 0.77 b. 0.87 с. 1.33 d. 2.50

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

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