A permanent ﬂood control dam is expected to have an initial cost of $2.8 million and an annual upkeep cost of $20,000. In addition, minor reconstruction will be required every 5 years at a cost of $200,000. As a result of the dam, ﬂood damage will be reduced by an average of $180,000 per year. Using an interest rate of 6% per year, the conventional B/C ratio will be closest to:
The four mutually exclusive alternatives shown on the next page are compared using the B/C method. The alternative to select is:
If the market interest rate is 16% per year when the inﬂation rate is 9% per year, the real interest rate is closest to:
The cost of an F-150 pick-up truck was $29,350 three years ago. If the cost increased only by the inﬂation rate and the price today is $33,015, the inﬂation rate was closest to:
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