Business, 27.02.2020 18:52 bandiadummy8595

The local electric company may renovate a number of substations within its system. Various costs and savings can be anticipated, depending on the type of renovation performed. Using benefit/cost analysis and an interest rate of 12%, determine which alternative should be chosen. Annual Annual Alternative First Cost Cost Savings Life A $1,100,000 $24,000 $180,000 20 years B 1,500,000 36,000 245,000 20 years C 1,750,000 41,000 295,000 20 years

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Answer from: makylahoyle

Select Alternative C with benefit to cost ratio of 1.071

Explanation:

The cost benefit analysis is a method to compare several projects and decide which one is most feasible.

We have three alternatives here and will compare them and decide which one to select.

Alternative | First Cost | Annual Cost | Annual Savings | Life

A | 1,100,000 | 24,000 | 180,000 | 20

B | 1,500,000 | 36,000 | 245,000 | 20

C | 1,750,000 | 41,000 | 295,000 | 20

Alternative A:

Total costs = First Cost + Total Annual Cost

Total costs = 1,100,000 + 24,000(P/A,12%,20)

Total costs = 1,100,000 + 24,000(7.469)

Total costs = 1,279,256

Total benefits = 180,000(P/A,12%,20) = 180,000(7.469) = 1,344,420

Benefit Cost Ratio = Total benefits/Total costs

Benefit Cost Ratio = 1,344,420/1,279,256

Benefit Cost Ratio = 1.051

Alternative B:

Total costs = First Cost + Total Annual Cost

Total costs = 1,500,000 + 36,000(P/A,12%,20)

Total costs = 1,500,000 + 36,000(7.469)

Total costs = 1,768,884

Total benefits = 245,000(P/A,12%,20) = 245,000(7.469) = 1,829,905

Benefit Cost Ratio = Total benefits/Total costs

Benefit Cost Ratio = 1,829,905/1,768,884

Benefit Cost Ratio = 1.034

Alternative C:

Total costs = First Cost + Total Annual Cost

Total costs = 1,750,000 + 41,000(P/A,12%,20)

Total costs = 1,750,000 + 41,000(7.469)

Total costs = 2,056,229

Total benefits = 295,000(P/A,12%,20) = 295,000(7.469) = 2,203,355

Benefit Cost Ratio = Total benefits/Total costs

Benefit Cost Ratio = 2,203,355/2,056,229

Benefit Cost Ratio = 1.071

Conclusion:

Select Alternative C because it has the highest benefit to cost ratio.

Answer from: Quest

3,500 beverages

explanation:

Answer from: Quest

(i know i'm late but the answer's "things about yourself" because you want to list things you're capable of, why you want to open up the business, the amount of money you're putting into it,etc.) i'm guessing you take online school small business, the answers to the quizzes are all over quizlet. just look up your question and type quizlet after it and it'll pop up.

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