Landscaping Plan A B Initial planting $75,000 $50,000 S65,000 cost Annual maintenance 4,000 5,000 4,700 expense Annual community benefits 20,000 18,000 20,000

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 11MC: Dixon Construction Materials has collected this information: Based on this Information, what is the...
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The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a public greenway. Benefits to the community have been estimated by a landscaping committee, and the costs of planting trees and shrubbery, as well as maintaining the greenway, are summarized below. The city’s discount rate is 8% per year, and the planning horizon is 10 years. Solve, a. Use the B–C ratio method to recommend the best plan when  annual maintenance expenses offset annual benefits in the numerator. b. Repeat Part (a) when annual maintenance expenses add to total costs in the denominator. Which plan is best? c. Should the recommendations in Part (a) and (b) be the same? Why or why not?

Landscaping Plan
A
B
Initial planting
$75,000 $50,000 S65,000
cost
Annual maintenance
4,000
5,000
4,700
expense
Annual community
benefits
20,000 18,000
20,000
Transcribed Image Text:Landscaping Plan A B Initial planting $75,000 $50,000 S65,000 cost Annual maintenance 4,000 5,000 4,700 expense Annual community benefits 20,000 18,000 20,000
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