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# Answer to Question #244925 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question #244925
A company is considering constructing a plant to manufacture a proposed new product. The land costs $300,000, the building costs$600,000, the equipment costs $250,000, and$100,000 additional working capital is required. It is expected that the product will result in sales of \$750,000 per year for 10 years,
1
2021-10-04T02:30:59-0400

Modified B-C ratio = (PW of annual benefits - PW of annual expenses) / (Land + Building + Equipment + Working capital - PW of salvage value)

"= [(750,000 - 475,000) x P\/A(15%, 10)] \/ [300,000 + 600,000 + 250,000 + 100,000 - (400,000 + 350,000 + 50,000) x P\/F(15%, 10)]\\\\\n\n= (275,000 x 5.0188**) \/ [1,250,000 - (800,000 x 0.2472**)]\\\\\n\n= 1,380,170 \/ (1,250,000 - 197,760)\\\\\n\n= 1,380,170 \/ 1,052,240\\\\\n\n= 1.31\\\\"

Since Modified B-C Ratio is greater than 1, Project is acceptable

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