Compute the benefit-cost ratio for trade route option

Assignment Help Finance Basics
Reference no: EM132459835

Even during the high emotions and brutal battles of the Crusades, trade must go on. Descendants of The Family have expanded their trade routes to Europe and far into Asia, including trade in jade (China), emeralds (central Africa), and lutefisk (Scandinavia). Naturally, each route present different benefits and costs.

Africa (emeralds) . China (jade) . Scandinavia (lutefisk)Scandinavia (lutefisk)

PV Gross Benefits 260,000 405,000 315,000

PV Operating Costs . 85,000 85,000 130,000

PV Capital Costs . 100,000 200,000 110000

a. Compute the Benefit/Cost ratio for each trade route option, where "Benefit" is the "Net-Benefit", i.e., defined as the Gross Benefits minus the Operating Cost.

b. Re-compute the Benefit/Cost ratio where the "Benefit" is the Gross Benefit and the "Cost" is the sum of the Operating Costs and the Capital Costs.

c. Do these different ratios give consistent ratios? Explain.

d. Based on the financial information you have calculated, which of the routes should be pursued, if resources are available to do only one of the three?

Reference no: EM132459835

Questions Cloud

What is colonialism : What do the authors mean that all morality is religious, even that of atheist? What is colonialism, and what is its significance for religions and cultures
What is the most that he would be willing to pay : The bank requires a 4.00% interest rate. What is the most that he would be willing to pay today rather than making the payments?
What is real interest rate : Why does the Federal Reserve rarely use the discount rate to implement its monetary policy?
Identify local cultural venues : Identify local cultural venues and inform you with deeper knowledge about the art form chosen. Organize reflections about engaging with a cultural experience
Compute the benefit-cost ratio for trade route option : Even during the high emotions and brutal battles of the Crusades, trade must go on. Descendants of The Family have expanded their trade routes to Europe
What is the equity multiplier : Pickler Company has a debt-ratio of 1.38. Return on assets is 7.63 percent total equity is $690,000.
Explain what the content of the revolutionary resistance : Explain why Marcuse thinks that Freud is mistaken about the relationship between the Reality Principle and the Performance Principle
Conduct a one-sided hypothesis test of the claim : Conduct a one-sided hypothesis test of the claim that corner-lot houses have higher average selling prices than those located on non-corner lots
Equivalent annual cost of the econo-cool model : What is the equivalent annual cost of the Econo-Cool model? What is the equivalent annual cost of the Luxury Air model?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd