11. Suppose that government is planning a project that exhibit following costs and benefits in real terms. Assume that the (real) interest rate is 5% per year. What is the Benefit-Cost ratio of this project?

Year Event Annual benefits ($) Annual costs ($)

0 Purchase and install 0 250,000

1 Annual benefits and costs 150,000 200,000

2 Annual benefits and costs 150,000 10,000

3 Annual benefits and costs 140,000 10,000

(a) 0.88

(b) 0.91

(c) 1.01

(d) 1.04