Please no written by hand solutionTwo projects are shown below. Interest rate is 10% per year with yearly compounding. Project AProject BProject Life10 years10 yearsBenefits$500 at year = 0 and $100 per year (at year = 1,2,3,…,10)$15 per year starting year 2 (at year = 2,3,4,…,10)Disbenefits$40 per year (at year = 1,2,3,…,10)$1 per year starting year 2 (at year = 2,3,…,10)Costs$600 at year = 0, $100 at year = 1$50 at year = 0(1) Find the conventional B/C ratio for Project A.(2) Find the conventional B/C ratio for Project B.(3) Based on B/C analysis (using conventional B/C ratio), which between A and B is more attractive?

Conventional B/C Ratio:The conventional benefit-cost ratio (BCR) is a financial metric used to…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please no written by hand solution

Two projects are shown below. Interest rate is 10% per year with yearly compounding.

	Project A	Project B
Project Life	10 years	10 years
Benefits	$500 at year = 0 and $100 per year (at year = 1,2,3,…,10)	$15 per year starting year 2 (at year = 2,3,4,…,10)
Disbenefits	$40 per year (at year = 1,2,3,…,10)	$1 per year starting year 2 (at year = 2,3,…,10)
Costs	$600 at year = 0, $100 at year = 1	$50 at year = 0

(1) Find the conventional B/C ratio for Project A.

(2) Find the conventional B/C ratio for Project B.

(3) Based on B/C analysis (using conventional B/C ratio), which between A and B is more attractive?

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