Problems

1- The cash flow of an investment is shown below. If the MARR for the investor is 15%, What is the B/C ratio?

2- An investment requires an initial payment of $1,000. The table below indicates the estimates of income and expense for this investment. What is the B/C for MARR of 10%? Is this a good investment?

Year

Income 70000 80000 90000 100000 110000

Expense 50000 60000 70000 80000 100000

3-You are asked to investigate two investment proposals with the estimates of income and expense shown below. There is also the possibility of investing the capital and receiving an interest rate of 15% annually. What would be the best choice for your client? Use both B/C ratio and payback methods.

Proposal Initial Cost Annual Annual Salvage Life

Benefit Cost Value

A 75,000

45,000 22,000 30,000 2 Year

B 2,100,000 60,000 15,000 45,000 4 Years

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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