Answer:
The B/C ratio if Podunk uses a cost of money of 4% is 0.99
Explanation:
In order to calculate the B/C ratio if Podunk uses a cost of money of 4%, we would have to use the following formula:
B/C ratio = PW BENEFITS / PWCOSTS
PW BENEFITS = $18,000 (P/A, 4%,12) + $3,500(P/G, 4%, 12) = $334,298
PW COSTS = $175,000 + $17,500(P/A. 4%,12) = $339,238
Therefore, B/C ratio = $334,298 / $339,238
B/C ratio = 0.99