Three Independent Projects Are Available for a Secret Government Agency

question 10

Essay

Three independent projects are available for a secret government agency. The estimated costs associated with each alternative are given below. Use the conventional B- C ratio method to determine which alternative(s), if any, should be selected at an interest rate of 7% per year. Assume a project life of 20 years and a B- C ratio of at least 1 for evaluation. $$\begin{array} { | l | l | l | l | } \hline & \text { Project } A & \text { Project } B & \text { Project } C \\\hline \text { itial cost, } \$ & \$ 1,300,000 & \$ 1,200,000 & \$ 1,450,000 \\\hline \text { nnual benefits, } \$ / y e a r & \$ 490,000 & \$ 450,000 & \$ 535,000 \\\hline \text { nnual disbenefits, } \$ / y e a r & \$ 310,000 & \$ 280,000 & \$ 345,000 \\\hline\end{array}$$

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Definitions:

Appease

The action of placating or pacifying someone by acceding to their demands.

Ineffective

Lacking the ability or success in producing a desired or intended result.

Loner

An individual who prefers solitude and does not seek out social interactions frequently.

Displace

To move or transfer someone or something from one place to another, often referring to the emotional process of redirecting feelings from the original source towards a substitute target.