Calculate the conventional b-c ratio of the project

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Problem 1: A public reforestation project is being considered. The project would involve a purchase of a large land area, and subsequent planting and maintenance of trees. The project is assumed to last 40 years, with the land kept as government property afterwards, and no cash flows resulting from the project's liquidation. The initial cost of purchasing land is estimated at $14 million, with ongoing annual cost of planting trees and maintenance crew salaries of $876000 per year. The annual benefits to the public in terms of cleaner air, recreation, and reduced flooding are quantified at an estimated $1.4 million per year. Assuming 10% cost of capital, calculate the CONVENTIONAL B-C ratio of the project.

Reference no: EM132940680

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