A City Council Is Planning to Build a New Bridge

question 15

Multiple Choice

A city council is planning to build a new bridge across a creek. This will require an immediate expenditure of $50 000, but will save citizens an estimated $5 000 in travel costs every year over the next twenty years. Alternatively, they could renovate an existing bridge. This would only cost $20 000, but the saving in travel costs would only be $2 000 every year. If the council's MARR is 5%, what is the BCR for upgrading from the renovated bridge to the new bridge?

• A)0.75
• B)1.20
• C)1.25
• D)1.64
• E)2.00