Use the estimates from Problem 9.39 (repeated below) to answer the questions asked concerning the extraction of rare metals in a National Wildlife Preserve. Utilize the B/C method, a 5-year study period, and a discount rate of 10% per year. The monetary unit is $ million. Use a spreadsheet.
Problem 9.39
The Department of Defense is considering three sites in the National Wildlife Preserve for extracÂtion of rare metals. The cash flows associated with each site are summarized. The extraction period is limited to 5 years and the interest rate is 10% per year. Use the B/C method to determine which site, if any, is acceptable. The monetary unit is $ million.
(a) Site A is selected (Screen image #1)
(b) Screen image #2. Work backwards in a new B vs. A comparison to obtain ?B/C = 1.01 (cell C16). This requires ?B = 33.17, which in turn requires B = 33.17 for site B. Perform C vs. B comparison to eliminate C, thus leaving only site B.
(c) Site C is acceptable (marginally) at B/C = 1.00
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