The following estimates (in $1000 units) have been developed for a new security system at Chicago's O'Hare Airport. First cost, S 13,000 AW of benefits, $/year FW (in year 20) of disbenefits, $ M&O costs, $/year 3,800 6,750 400 Life of project, years 20 a. Calculate the conventional B/C ratio at a dis- count rate of 10% per year. b. Determine the minimum first cost necessary to make the project economically unjustified.

The following estimates (in $1000 units) have been developed for a new security system at Chicago's O'Hare Airport. First cost, S 13,000 AW of benefits, $/year FW (in year 20) of disbenefits, $ M&O costs, $/year 3,800 6,750 400 Life of project, years 20 a. Calculate the conventional B/C ratio at a dis- count rate of 10% per year. b. Determine the minimum first cost necessary to make the project economically unjustified.

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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