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Three public investment proposals with the same service life are under consideration: P1, P2, and P3. Their respective total benefits, initial investment, and recurring costs
- Three public investment proposals with the same service life are under consideration: P1, P2, and P3. Their respective total benefits, initial investment, and recurring costs are given as present worth:
Present Worth | Proposal P1 | Proposal P2 | Proposal P3 |
B | $40,000 | $70,000 | $50,000 |
I | $10,000 | $30,000 | $20,000 |
C | $10,000 | $20,000 | $15,000 |
- Do all proposals have an acceptable B/C ratio?
- If there is no do-nothing alternative, which proposal would you select based on incremental investment?
Dissection: identify input & output variables and include cash flow table
Solution : identify method
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