A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system. Click the icon to view the interest factors for discrete compounding when i= 11% per year. (a) Using the benefit-cost ratio BC), which system should be selected? The PIA-B is 2.11. (Round to two decimal places.) Which system should be selected? Choose the correct answer below. O Design B Design A (b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change? The Pl()A-c is 4.39. (Round to two decimal places.) The PIC-B is (Round to two decimal places.) More Info N 11 12 13 14 15 16 17 18 19 20 Single Payment Compound Amount Factor (F/P, L, N) 3.1518 3.4985 3.8833 4.3104 4.7846 5.3109 5.8951 6.5436 7.2633 8.0623 Present Worth Factor (P/F, I, N) 0.3173 0.2858 0.2575 0.2320 0.2090 0.1883 0.1696 0.1528 0.1377 0.1240 Print Compound Amount Factor (FIA, L, N) 19.5614 22.7132 26.2116 30.0949 34.4054 39.1899 44.5008 50.3959 56.9395 64.2028 Done Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, L, N) (P/A, i, N) 0.0511 6.2065 0.0440 0.0382 0.0332 0.0291 6.4924 6.7499 6.9819 7.1909 0.0255 0.0225 0.0198 0.0176 0.0156 7.3792 7.5488 7.7016 7.8393 7.9633 X
A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system. Click the icon to view the interest factors for discrete compounding when i= 11% per year. (a) Using the benefit-cost ratio BC), which system should be selected? The PIA-B is 2.11. (Round to two decimal places.) Which system should be selected? Choose the correct answer below. O Design B Design A (b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change? The Pl()A-c is 4.39. (Round to two decimal places.) The PIC-B is (Round to two decimal places.) More Info N 11 12 13 14 15 16 17 18 19 20 Single Payment Compound Amount Factor (F/P, L, N) 3.1518 3.4985 3.8833 4.3104 4.7846 5.3109 5.8951 6.5436 7.2633 8.0623 Present Worth Factor (P/F, I, N) 0.3173 0.2858 0.2575 0.2320 0.2090 0.1883 0.1696 0.1528 0.1377 0.1240 Print Compound Amount Factor (FIA, L, N) 19.5614 22.7132 26.2116 30.0949 34.4054 39.1899 44.5008 50.3959 56.9395 64.2028 Done Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, L, N) (P/A, i, N) 0.0511 6.2065 0.0440 0.0382 0.0332 0.0291 6.4924 6.7499 6.9819 7.1909 0.0255 0.0225 0.0198 0.0176 0.0156 7.3792 7.5488 7.7016 7.8393 7.9633 X
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per
year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system.
Click the icon to view the interest factors for discrete compounding when i= 11% per year.
(a) Using the benefit-cost ratio BC(), which system should be selected?
The PIA - B is 2.11. (Round to two decimal places.)
Which system should be selected? Choose the correct answer below.
Design B
Design A
(b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change?
The Pl()- cis 4.39. (Round to two decimal places.)
The Pl(c-B is. (Round to two decimal places.)
More Info
N
11
12
13
14
15
16
17
18
19
20
Single Payment
Compound
Amount
Factor
(F/P, I, N)
3.1518
3.4985
3.8833
4.3104
4.7846
5.3109
5.8951
6.5436
7.2633
8.0623
Present
Worth
Factor
(P/F, I, N)
0.3173
0.2858
0.2575
0.2320
0.2090
0.1883
0.1696
0.1528
0.1377
0.1240
Print
Compound
Amount
Factor
(F/A, I, N)
19.5614
22.7132
26.2116
30.0949
34.4054
39.1899
44.5008
50.3959
56.9395
64.2028
Done
Equal Payment Series
Sinking Present
Fund
Factor
(A/F, I, N)
0.0511
0.0440
0.0382
Worth
Factor
(P/A, I, N)
6.2065
6.4924
0.0332
0.0291
0.0255
0.0225
0.0198
0.0176
0.0156
6.7499
6.9819
7.1909
7.3792
7.5488
7.7016
7.8393
7.9633
X
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