# Finance benefit-cost ratio analysis : analysis of cost ratio

Document Sample

```					              Sub: Finance                                                  Topic: Benefit-Cost Ratio Analysis

Question:

Benefit-cost ratio analysis.

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Create benefit-cost ratios for the tree cost of capital scenarios posited here. To what extent
does a benefit-cost ratio analysis support the conclusions you derive using a et present value
analysis?

Solution:

Exhibit A: Cost of the
Project

Year                                             1       2       3       4       5      6        7       8      9     10

\$        \$   \$
Initial Capital Costs                          200      400 400

\$                    \$      \$
Cost of Operations                                                    \$ 20 \$ 21 \$ 22 \$ 23 24                   25     26

\$                    \$      \$
Anticipated Maintenance                                               \$ 10 \$ 10 \$ 11 \$ 11 12                   12     13

\$       \$       \$                                       \$     \$       \$
Social Costs *                                  40      40      30    \$ 20 \$ 10 \$ 10 \$
```
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Description: Benefit-cost ratio analysis. : Create benefit-cost ratios for the tree cost of capital scenarios posited here
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