1. The project is to construct a lateral canal that will provide irrigation for 150 ha production area along thericefields of Villaverde and it is being considered by the municipality. The locality has two (wet and dry)croppings. A one (1) ha ricefarm yields 90 cavans for rainfed areas. The following costs have beenidentified.Land:800 meters long x 6 meters parcel of landat Php 950.00 per ha4,500,000.00500,000.00250,000.00Construction:Annual O&M (government):Annual O&M (farmer irrigators):Rental receipts from irrigators:Convenience to farmers:17 cav/ha500,000.0022%Yield increase:Neglecting other factors associated with production yield increase, determine the B/C ratio of the projectwith a MARR of 10% per year if the project is to be used for 25 years. Is the project acceptable?

A benefit-cost (B/C) proportion is a pointer, utilized in money saving advantage investigation, that…

icefields of Villaverde and it is being considered by the municipality. The locality has two (w roppings. A one (1) ha ricefarm yields 90 cavans for rainfed areas. The following costs dentified. Land: 800 meters long x 6 meters parcel of land at Php 950.00 per ha 4,500,000.00 Construction: Annual O&M (government): Annual O&M (famer irrigators): Rental receipts from irrigators: 500,000.00 250,000.00 17 cav/ha

icefields of Villaverde and it is being considered by the municipality. The locality has two (w roppings. A one (1) ha ricefarm yields 90 cavans for rainfed areas. The following costs dentified. Land: 800 meters long x 6 meters parcel of land at Php 950.00 per ha 4,500,000.00 Construction: Annual O&M (government): Annual O&M (famer irrigators): Rental receipts from irrigators: 500,000.00 250,000.00 17 cav/ha

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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The California Forest Service is considering two locations for a new state park. Location Ewould require an investment of $3 million and $50,000 per year in maintenance. Location Wwould cost $7 million to construct, but the Forest Service would receive an additional $25,000per year in park use fees. The operating cost of location W will be $65,000 per year. The revenueto park concessionaires will be $500,000 per year at location E and $700,000 per year at locationW. The disbenefits associated with each location are $30,000 per year for location E and $40,000per year for location W. Use(a) The B/C method, and(b) The modified B/C method to determine which location, if either, should be selected, using aninterest rate of 12% per year. Assume that the park will be maintained indefinitely.
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