Jones llc is purchasing a new machine for 180000 the new mac

Jones llc is purchasing a new machine for $180000 the new machine would generate cash flow 100000 for each of the next three years. Jones uses a discount rate of 15% what is the benefit cost ratio ?

A. 1.57

B. 1.67

C. 1.77

D. 1.87

Solution

benefit to cost ratio of purchasing a new machine = 100,000*3/180,000

benefit to cost ratio of purchasing a new machine = 1.67