Case Study 9 A Major Equipment Purchase Is Being Considered by Metro Atlanta

Multiple Choice

Case Study 9
A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10%
-The B/C ratio for this investment is ___________.

A) 1.48
B) 0.92
C) 0.51
D) 1.13