N = 30 years

MARR = 6%
Initial investment = $2,000,000
Annual expense = $30,000
Major upkeep expense/six year = $50,000
Annual revenue = $135,000

PW(benefits) = $135,000(P/A,6%,30) = $135,000*13.765 = $1,858,275

PW(costs) = $2,000,000 + $30,000(P/A,6%,30) + $50,000(A/F,6%,6)(P/A,6%,30) =
$2,000,000 + $30,000*13.765 + $50,000*0.1434*13.765 = $2,511,645.05

Conventional B-C ratio with PW

PW (benefits) $ 1,858,275
B-C = = =0.7399<1 => This project is not
P W (total cost ) $ 2,511,645.05
recommended.

2 mutually exclusive proposals. MARR = 6%; N = infinite

I
Initial investment = $1,350,000
Annual expenses = $110,000
II
Initial investment = $700,000
Expense = $200,000 per 12-year
Annual expenses = $95,000 (first 12 years)
Annual expenses = $150,000 (after year twelfth)
Conventional B-C ratio with PW
PW (benefits)
B-C =
PW (total cost )
I: PW(costs) = $1,350,000 + $110,000(P/A,6%,∞ ) = $110,000/0.06 = $3,183,333.3
II: PW(costs) = $700,000 + $200,000(A/F,6%,12)(P/A,6%,∞ ) + $95,000(P/A,6%,12)
+ $150,000(P/A,6%,∞ ) = $700,000 + $200,000*0.0593/0.06 + $95,000*8.384 +
$150,000/0.06 = $4,194,146.7
Both projects have same benefits. Thus, proposal I should be recommended
because of its lower PW(costs) ($3,183,333.3 < $4,194,146.7)

*bài này không care cái annual benefits đề cho vì cái đó chỉ là phần public thôi.
Four mutually exclusive projects
N = 80 years
MARR = 12%
PW (benefits) PW (benefits)
B-C = <=> B-C ratio =
P W (total cost ) Initial cost
A B C D
Initial cost = PW(C) $62,000 $52,000 $150,000 $55,000
Annual benefits = PW(B) $83,080 $66,560 $166,500 $74,800
B-C ratio 1.34 1.28 1.11 1.36
Accepted? Yes Yes Yes Yes
Ranking order by increasing equivalent worth of cost. B < D < A < C
Alternative B should be the baseline for the upcoming incremental analysis.
The incremental analysis:
PW Conventional
Alternative Justified?
Costs Benefits B-C ratio
D-B $3,000 $8,240 2.75 Yes
A-D $7,000 $8,280 1.18 Yes
C-A $88,000 $83,420 0.95 No
=> Alternative A should be selected to be invested into because the increment is
justified.
Three mutually exclusive landscaping plans
i% = 8%
N = 10 years
AW (benefits) Annual benefit − Annual expense
a) B-C ratio = =¿
AW (total cost) Initial cost ( A /P , 8 % , 10)
A B C
Initial cost $75,000 $50,000 $65,000
Annual expenses $4,000 $5,000 $4,700
Annual benefits $20,000 $18,000 $20,000

A B C
AW(B) $16,000 $13,000 $15,300
AW(C) $11,175 $7,450 $9,685
Conventional B-C ratio 1.43 1.74 1.58
Accepted? Yes Yes Yes
Ranking order by increasing equivalent worth of cost: B < C < A
Alternative B should be the baseline for the upcoming incremental analysis.
The incremental analysis:
Landscaping AW Conventional
Justified?
plans Costs Benefits B-C ratio
C-B $2,235 $2,300 1.029 Yes
A-C $1,490 $700 0.469 No
=> Alternative C should be selected to be invested into because the increment is
justified.
AW (benefits) Annual benefit
b) B-C ratio = =¿
AW (total cost) Initial cost ( A / P , 8 % , 10)+ Annual expense
A B C
AW(B) $20,000 $18,000 $20,000
AW(C) $15,175 $11,450 $13,685
Conventional B-C ratio 1.32 1.57 1.46
Accepted? Yes Yes Yes
Ranking order by increasing equivalent worth of cost: B < C < A
Alternative B should be the baseline for the upcoming incremental analysis.
The incremental analysis:
Landscaping AW Conventional
Justified?
plans Costs Benefits B-C ratio
C-B $2,235 $2,000 0.89 No
A-B $3,725 $2,000 0.53 No
=> Alternative B should be selected to be invested into because the increment is
justified.