Benefit Cost Ratio (BCR) Roto Air plans to spend $1,000,000 on this project, resulting in a total savings of $2,500,000 over the life of the project.
Calculate the Benefit Cost Ratio. Important: show your work. Ignore any effects of the time value of money. Roto Air also considered another project that would have partially satisfied their needs. It would have required a $750,000 investment and would result in a savings of $125,000 per year for 10 years. Calculate the Benefit Cost Ratio. Important: show your work. Ignore any effects of the time value of money. Comparing only the BCRs, explain which project should Roto Air should have chosen. Ignore any effects of the time value of money.
Payback Period ;Calculate the payback period for the $1,000,000 investment shown above. Important: show your work.
Calculate the payback period for the $750,000 investment shown above. Important: show your work. Ignore any effects of the time value of money.
Comparing only on the payback periods, explain which project should Roto Air have chosen. Ignore any effects of the time value of money.
