Question

11. Consider the following investment opportunity: Initial cost = $126,890. Annual benefit = $23,000. Useful life = 30 Years. Salvage value = $0 What interest rate results in a benefit-cost (B/C) ratio equal to one? A) 15% B) 18% C) 12% D) 9%

          11. Consider the following investment opportunity:
Initial cost = $126,890.
Annual benefit = $23,000.
Useful life = 30 Years.
Salvage value = $0
What interest rate results in a benefit-cost (B/C) ratio equal to one?
A) 15%
B) 18%
C) 12%
D) 9%

11. Consider the following investment opportunity:
Initial cost = 126,890.
Annual benefit =23,000.
Useful life = 30 Years.
Salvage value = 0
What interest rate results in a benefit-cost (B/C) ratio equal to one?
A) 15%
B) 18%
C) 12%
D) 9%

Added by Patricia M.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Nicole Smina

Step 1

Total benefits = Annual benefit x Useful life Total benefits = $23,000 x 30 Total benefits = $690,000 Show more…

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Please write the whole solution, not just the choice!! And PLEASE PLEASE draw the CASH DIAGRAM. 11. Consider the following investment opportunity: Initial cost = $126,890. Annual benefit = $23,000. Useful life = 30 years. Salvage value = $0. What interest rate results in a benefit-cost (B/C) ratio equal to one? A) 15% B) 18% C) 12% D) 9%