Q1 In a modified B/C ratio:

a. Disbenefits and M&O costs are subtracted from benefits in the numerator

b. Disbenefits are subtracted from benefits, and M&O are added to cost in the denominator

c. Disbenefits are added to costs, and M&O costs are subtracted from benefits

d.M&O receives the same treatment as the salvage value

Q2. To convert constant-value dollars into inflated dollars, it is necessary to take CV dollars and:

a. Divide by (1 + *i*_{f}) ^{n}

^{b}^{.} Divide by (1 + *f* ) ^{n}

^{c}^{.} Divide by (1 + *i*) ^{n}

d. Multiply by (1 + *f* )^{n}

^{please explain me why you chose the answer.}

Q1 In a modified B/C ratio:

a. Disbenefits and M&O costs are subtracted from benefits in the numerator

b. Disbenefits are subtracted from benefits, and M&O are added to cost in the denominator

c. Disbenefits are added to costs, and M&O costs are subtracted from benefits

d.M&O receives the same treatment as the salvage value

Q2. To convert constant-value dollars into inflated dollars, it is necessary to take CV dollars and:

a. Divide by (1 + *i _{f}*)

^{n}^{b}* ^{.}* Divide by (1 +

*f*)

^{n}^{c}* ^{.}* Divide by (1 +

*i*)

^{n}d. Multiply by (1 + *f* )^{n}

^{please explain me why you chose the answer.}

For unlimited access to Homework Help, a Homework+ subscription is required.

### Related textbook solutions

## Related questions

1. The Sit N Sip Tearoom has an outdoor deck where customers can sit outside on nice days and sip their tea. Next door to the tearoom is the Flowerchild Nursery, which grows flowers for sale to florists. Using the ideas of social and private benefits, which company seems more likely to provide positive externalities for the other? Briefly explain.

2. The Gizmo Company is looking at plans for developing many new household gadgets. The table below shows the company's demand for financial capital for research and development of these gadgets, based on its expected rates of return from selling them. However, say that every investment would have an additional 5% social return: that is, an investment that pays at least a 6% return to the Gizmo Company will pay at least an 11% return for society as a whole, an investment that pays at least 7% for the Gizmo Company will pay at least 12% for society as a whole, and so on.

Value of R&D Projects That Provide at Least This High a Private Rate of Return

Estimated Rate to the Gizmo Company | of Return (measured in millions of dollars) |

10 | 100 |

9 | 102 |

8 | 108 |

7 | 118 |

6 | 133 |

5 | 153 |

4 | 183 |

3 | 223 |

a. If the opportunity cost of financial capital for the Gizmo Company is 9%, how much will it invest in R&D if it receives only the private benefits of this investment?

b. In the table, the numbers in the second column are rising as the numbers in the first column are falling. What's the economic reasoning behind this pattern?

c. How much will the firm invest if it also receives the social benefits of its investment?