For the following projects what is the opportunity cost of capital if the budget is (a) S60,000, and (b) S120,000? If Project 4 has an external environmental cost of S1000 annually that is included, (c) how does this change the answer to (a)? (d) How does this change the answer to (b)? Project Life (years) First Cost Annual Benefit Salvage Value 20 $20.000 $4000 20 20,000 3200 S20,000 3 30 20,000 3300 10,000 4 15 20,000 4500 5 25 20.000 4500 -20.000 6 10 20,000 5800 15 20. 000 4000 Li0 000

For the following projects what is the opportunity cost of capital if the budget is (a) S60,000, and (b) S120,000? If Project 4 has an external environmental cost of S1000 annually that is included, (c) how does this change the answer to (a)? (d) How does this change the answer to (b)? Project Life (years) First Cost Annual Benefit Salvage Value 20 $20.000 $4000 20 20,000 3200 S20,000 3 30 20,000 3300 10,000 4 15 20,000 4500 5 25 20.000 4500 -20.000 6 10 20,000 5800 15 20. 000 4000 Li0 000

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

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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