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A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $260,000, and it will save an estimated $45,000 per year in year-zero dollars that will increase with the general inflation rate of 8 % per year over a six-year period. The market value of the system will be $20,000 at the end of six years, and the market interest rate (im) is 20 % over this period. The company MARR is 18 % per year in its economic evaluations of refurbished systems. Determine the benefit-cost (B-C) ratio based on present worth for this project.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92411847

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