A facility constructed in one year is estimated to cost $7.8 million with a life of 50 years. Estimates of its earnings are made below.

What interest rate will give a benefit:cost ratio of 1.0?

If the estimates of annual returns were reduced by 20%, what would this interest rate be?

Years after completion Annual return ($)

1 – 5 200000 6 – 10 400000 Thereafter 800000