Question on Benefits and Costs
A state legislature has appropriated $15 mil to purchase and prepare the house for several new state recreational areas. Alternatives have been suggested and forecasts to get acquisition, preparation and annual operating costs have been predicted and the following for each alternative. Also listed are the forecasted annual rewards to the community in dollars.
Annual Benefits are to be calculated as Net Benefits or Annual Rewards minus Gross annual Operating Costs. The purchase is the amount of Acquisition costs and Preparation Costs.
The planning period horizon should think about the buy and planning as being required for the current 12 months and then pertaining to 20 years afterwards. The value of the park at the end of the 20 year time ecart (salvage value) can be ignored. (all numbers are in millions of dollars) Use an total annual discount price of seven percent in the analysis. Any money left inside the budget after the acquisition and preparation period can be used for more enhancements for the parks.
a. Using a B-C method for reviews, determine which ones should be chosen.
b. Utilizing a B/C method for evaluations, identify which ones needs to be chosen.
c. What non-financial considerations could be important?
|Site |Acquisition Expense |Preparation Price |Annual Working Cost|Annual Rewards | |1 |$1. 0 |$3. two |$1. zero |$3. 0 | |2 |$2. 2 |$2. a few |$1. a couple of |$2. a few | |3 |$1. 4 |$0. 8 |$0. being unfaithful |$2. zero | |4 |$0. on the lookout for |$0. six |$1. four |$3. a couple of | |5 |$3. four |$3. 1 |$1. 0 |$1. 0 | |6 |$2. six |$1. 5 |$0. being unfaithful |$1. 5 | |7 |$1. 5 |$1. six...