Question 6 (B/C Analysis):
A) Construction Project
You are planning to invest your money in a new project that will have a first cost of $1 million and an annual maintenance cost of $50,000 per year.
The income of the project is expected to be $300,000 per year.
The project will have an 10-year life.
At an interest rate of 10% per year compounded, should the project be undertaken (Perform B/C Analysis)?
B /C =
B )Alternative Investment
If there is another option which, is you invest the same amount (1,000,000) in an investment company that gives 3% per year rate of return,
The investment will will be for 10-year .
How much the investment company will give every year?
Which option would be better?