Benefit-cost ratio based on present worth for project

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A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $100,000, and it will save an estimated $25,000 per year in year-zero dollars that will increase with the general inflation rate of 6 % per year over a six-year period. The market value of the system will be $5,000 at the end of six years, and the market interest rate (im) is 25 % over this period. The company MARR is 20 % per year in its economic evaluations of refurbished systems. Determine the benefit-cost (B-C) ratio based on present worth for this project.

Reference no: EM131603152

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