The following data are available for two mutually exclusive projects:
|
Project A
|
Project B
|
PW(benefits)
|
$19,000,000
|
$15,000,000
|
PW(Operating and maintenance cost)
|
5,000,000
|
8,000,000
|
PW(capital cost)
|
5,000,000
|
1,000,000
|
(a) Compute the benefit-cost ratios for both projects.
(b) Compute the modified benefit-cost ratios for both projects.
(c) Compute the benefit-cost ratio for the increment between the projects.
(d) Compute the present worths of the two projects.
(e) Which is the preferred project? Explain.