Question
Please write the CBA analysis for these two options (10 points) Option A requires the purchase of a garbage collection vehicle that needs a two-person
Please write the CBA analysis for these two options (10 points)
Option A requires the purchase of a garbage collection vehicle that needs a two-person crew. The vehicle will cost $60,000 and each worker will be paid $12,000 a year. The city would pick up 300 tons of garbage annually, and for each ton of garbage collected, it would charge a $400 fee. The city would have annual revenue of $120,000 (300 $400) from this operation.
Option B requires a vehicle for a three-person crew. The vehicle will cost $80,000 and each worker will be paid $10,000 annually. With this option, the citys garbage collection capacity would be 300 tons annually, so the annual revenue would be $120,000 (300 $400).
Using a five-year period and a discount rate of 5 percent, which option should be recommended in the budget request?
Please fill in the correct answer in each blank provided below. Project A.
NPV | Present value of Benefits | Present value of Costs |
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Please fill in the correct answer in each blank provided below. Project B.
NPV | Present value of Benefits | Present value of Costs |
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