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A local municipality is considering investing $220,000 to upgrade a park. Based on similar investments made by similar cities, it is anticipated the investment will
A local municipality is considering investing $220,000 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 7-year period as shown in the cash flow profile given below in thousands of dollars. Notice, an intermediate investment of $140,000 is anticipated in the 6th year of the investment. Based on a MARR of 5%, calculate the benefit-cost ratio of the investment.
(Round answer to two decimal places.)
(All values in thousand dollars) | ||||||
End-of Year | Costs | Benefits | Net Cash Flow | |||
0 | $220 | -$220 | ||||
1 | $70 | $120 | $50 | |||
2 | $70 | $130 | $60 | |||
3 | $70 | $140 | $70 | |||
4 | $70 | $150 | $80 | |||
5 | $70 | $160 | $90 | |||
6 | $210 | $170 | -$40 | |||
7 | $70 | $160 | $90 |
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