four mutually exclusive projects are being considered for a new 2 - mile jogging track. the life of the…

four mutually exclusive projects are being considered for a new 2 - mile jogging track. the life of the track is expected to be 80 years, and the sponsoring agencys marr is 11% per year. annual benefits to the public have been estimated by an advisory committee and are shown below. use the b - c method (incrementally) to select the best jogging track. perform the incremental b - c analysis. fill - in the table below. (round to two decimal places.)

four mutually exclusive projects are being considered for a new 2 - mile jogging track. the life of the track is expected to be 80 years, and the sponsoring agencys marr is 11% per year. annual benefits to the public have been estimated by an advisory committee and are shown below. use the b - c method (incrementally) to select the best jogging track. perform the incremental b - c analysis. fill - in the table below. (round to two decimal places.)

Answer

Explanation:

Step1: Calculate incremental benefits and costs

Incremental cost between A and B: ( \Delta C = 55000 - 53000=$2000 ) Incremental benefit between A and B: ( \Delta B=9500 - 8000=$1500 ) Incremental cost between C and A: ( \Delta C = 61000 - 55000=$6000 ) Incremental benefit between C and A: ( \Delta B = 10500 - 9500=$1000 )

Step2: Calculate incremental B - C ratio for C over A

The formula for the B - C ratio is ( B/C=\frac{B}{C} ). For incremental analysis, ( \text{Inc. B - C ratio}=\frac{\Delta B}{\Delta C\times(A/P, i, n)} ) Since ( n = 80 ) years and ( i=11% ), ( (A/P,11%,80)\approx0.11 ) (using the formula ( (A/P,i,n)=\frac{i(1 + i)^{n}}{(1 + i)^{n}-1} ), and for large ( n ), when ( i = 0.11 ), ( (A/P,11%,80)\approx0.11 )) ( \text{Inc. B - C ratio for C over A}=\frac{1000}{6000\times0.11}=\frac{1000}{660}\approx1.52 )

Answer:

1.52