Important instruction: Select only one to sol ve, either prob. #35 or #36, not b
ID: 1124997 • Letter: I
Question
Important instruction: Select only one to sol ve, either prob. #35 or #36, not both, ext ra work result in negative credit, Mark X" across the unused problem. 35) Consider the following Projects and Find the best choice based upon B/C analysis logical procedure of analysis and final selection. Show clearly whic Assuming that the first cost of each project-its PW of cost. h one you dro p/keep as compared to "1 (10pts) ared to " a b c d e f PW of Cost 300 200 250 500 400 100 250 300 PW of Benefit 320 250 150 450 350 150 250 250 Calculated B/CExplanation / Answer
Answer:
Project a
PW of cost = 300
PW of benefit = 320
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 320/300 = 1.07
The B/C ration of Project a is 1.07
Project b
PW of cost = 200
PW of benefit = 250
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 250/200 = 1.25
The B/C ration of Project b is 1.25
Project c
PW of cost = 250
PW of benefit = 150
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 150/250 = 0.6
The B/C ration of Project c is 0.6
Project d
PW of cost = 500
PW of benefit = 450
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 450/500 = 0.9
The B/C ration of Project d is 0.9
Project e
PW of cost = 400
PW of benefit = 350
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 350/400 = 0.87
The B/C ration of Project e is 0.87
Project f
PW of cost = 100
PW of benefit = 150
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 150/100 = 1.5
The B/C ration of Project f is 1.5
Project g
PW of cost = 250
PW of benefit = 250
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 250/250 = 1
The B/C ration of Project g is 1
Project h
PW of cost = 300
PW of benefit = 250
Calculate B/C ratio -
B/C ratio = PW of benefit/PW of cost = 250/300 = 0.83
The B/C ration of Project h is 0.83
The projects that have B/C ratio greater than or equal to 1 will be kept while those which have B/C ratio of less than 1 will be drop.
It can be seen that Project c, Project d, Project e, and Project h have B/C ratio of less than 1. So, these projects will be dropped.
Project a, Project b, Project f, Project g has B/C ratio of either equal to 1 or greater than 1. So, these projects will be kept.
Out of the projects that are kept, the B/C ratio of Project f is greatest.
So, the best choice based upon B/C analysis technique is Project f.