1. A city government is considering increasing the capacity of the current waste water treatment plant. The estimated financial data for the project are as follows: Calculate the benefit-cost ratio for this capacity expansion.
   1. Calculate B, I and C
   2. Calculate BC Ratio

1. Consider the following 2 projects
   1. Calculate the profitability index for each at an interest rate of 6%
   2. Determine which project would you consider using incremental PI analysis?

\begin{tabular}{|c|c|} \hline Description & Data \\ \hline Capital Investment & $1,000,000 \\ \hline Project Life & 20 Years \\ \hline Incremental Annual Benefits & $220,000 \\ \hline Incremental Annual Costs & $80,000 \\ \hline Salvage Value & $40,000 \\ \hline Discount Rate & 5% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline N & Project A1 & Project A2 \\ \hline 0 & $900,000 & $1,200,000 \\ \hline 1 & $400,000 & $200,000 \\ \hline 2 & $340,000 & $300,000 \\ \hline 3 & $300,000 & $350,000 \\ \hline 4 & $240,000 & $440,000 \\ \hline 5 & $200,000 & $400,000 \\ \hline 6 & $150,000 & $350,000 \\ \hline \end{tabular}