Ten cavemen with a remaining average life expectancy of 10 years use a path from their cave to a spring some distance away. The path is not easily traveled due to 100 large stones that could be removed.
The annual benefit to each individual if the stones were removed is $9.25. Each stone can be removed at a cost of $1.00.
The interest rate is 2 %. Compute the benefit/cost ratio for the individual if he alone removed the 100 stones.
Compute the benefit/cost ratio for the individual if the task was undertaken collectively, with each individual removing 10 stones.
What maximum amount may be charged by a manager who organizes the group effort if the minimum acceptable benefit/cost ratio is 2?