What is the benefit-cost ratio of the project

Reference no: EM131787006

Question: A plastics manufacturing plant is proposed for Lewisburg, PA that would require initial construction costs of $17.5 million, and annual operations and maintenance costs of $325 thousand. In addition, every fifth year, an overhaul of the plant equipment will be required at a cost of $1.25 million. Income from the plant in the first year will be $2.5 million, with revenues expected to increase at a rate of 2% per year. Assuming a 30-year plant life, a final market value of the plant of $1.5 million, and a discount rate of 10%, what is the Benefit-Cost ratio of this project? Should it be pursued?

Reference no: EM131787006

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