Calculate the net present value and benefit cost ratio

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The parks department is considering building a new pool. If the project is approved, the pool will be constructed in 2016 for a total cost of $400,000 to be paid from the cash reserves of the department. The pool will open in 2017 and is expected to generate $97,000 in revenue each year. It will cost roughly $68,000 per year to operate. It is expected to last 20 years before it will require another major capital investment.   Using a 3% discount rate, calculate the Net Present Value (NPV) and Benefit Cost Ratio (BCR) for the project over the next 21 years.   Assume the construction costs occur at the end of year one and that all costs and benefits occur at the end of each year.

What is the NPV and BCR for the project?

Reference no: EM13834953

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