Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. A local municipality is considering investing $250,000 to upgrade a park. Based on similar investments made by similar cities, it anticipated the investment will

1.
image text in transcribed
image text in transcribed
image text in transcribed
A local municipality is considering investing $250,000 to upgrade a park. Based on similar investments made by similar cities, it anticipated the investment will result in annual costs and annual benefits over a 15-year period as shown in the cash flow profile siven below in thousands of dollars. Notice, an intermediate investment of $150.000 is anticipated in the oth Year of the investment Based ona MARR of 5%,use benefit cost ratio analysis to determine whether the investment should be made All values in thousand dollars) Net Cash End-of Year Costs Benchts Flow 0 $250 -$250 1 $80 5125 545 2 580 $135 555 3 580 $145 565 $80 $155 $75 5 580 $165 $85 6 $230 $175 555 7 $80 $165 $85 B $80 $155 $75 9 580 $145 $65 $80 10 $135 $55 Question 1 of 3 > - 740 E 9 SBO $145 $65 10 $80 $135 $55 11 $80 $125 $45 12 580 $115 $35 13 $80 $105 $25 14 $80 595 $15 15 $80 585 $5 Click here to access the TVM Factor Table calculator B/C Carry all interim calculations to 5 decimal places and then round your final answer to 4 decimal places. The tolerance is 0.0003. 1 The investment be made as the B/C ratio is A local municipality is considering investing $250,000 to upgrade a park. Based on similar investments made by similar cities, it is anticipated the investment will result in annual costs and annual benefits over a 15-year period as shown in the cash flow profile given below in thousands of dollars. Notice, an intermediate investment of $150,000 is anticipated in the 6th year of the investment Based on a MARR of 5%,use benefit-cost ratio analysis to determine whether the investment should be made. (All values in thousand dollars) End-of Year Costs Benefits Net Cash Flow O $250 -$250 1 $80 $125 $45 N 2 $55 $80 $135 $65 3 $145 $80 $80 4 $75 $155 $85 5 $165 $80 -$55 $175 $230 6

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions