A $3.5 million road widening project over a 10-mile stretch is proposed. The project will induce a 25 percent of increase in the traffic volume with an existing AADT of 20,000 in the 3-hour peak period after widening. Use 250 as the number of days per year having peak period traffic. The average speed of the existing traffic will increase from 45 mph to 55 mph. Energy use will go from an average of 28 to 23 mpg. The annual average maintenance cost is $125,000. If the value of time is $15 per hour and gasoline costs $4.5 per gallon. Use a service life of 30 years and a discount rate of 4%, calculate the project’s net present worth, benefit-to-cost ratio, and equivalent uniform annual benefits.
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- 10-17. Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 80 years, and the sponsoring agency's MARR is 12% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. (10.9) A B Initial cost $62,000 $52,000 Annual $10,000 $8,000 benefits B-C ratio Alternative 1.34 1.28 C $150,000 $20,000 1.11 D $55,000 $9.000 1.36arrow_forwardConsider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 5% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. Project 1 $14,200 $3,832 O A. No B. Yes $2,391 Project 2 $21,700 $5,608 $2,580 a. Based on the PW, the project that is more economical is Project b. Calculate the IRR of each alternative (use the trial-and-error method) % (Round to the nearest one decimal place) The IRR of Project 1 is The IRR of Project 2 is % (Round to the nearest one decimal place) (Enter the project number). c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project is more economical. d. Do the two methods produce the same recomendation for the most economical project?arrow_forward7 ! Required information Consider the cash flows shown. Year Revenues, $ Costs, $ 0 1 2 19,000 0 25,000 -6,000 -30,000 -7,000 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. The spreadsheet function is MIRR(B1:B5,10%,18%) 3 4,000 -5,500 Determine the external rate of return using the MIRR method if ir = 18% per year and ib= 10% per year. Verify your answer with the spreadsheet function. The external rate of return is 4 28,000 -13,000 % per year.arrow_forward
- help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forwardQuestion 1 A design firm is considering multiple independent projects for the upcoming quarter. For a MARR of 6.5% per quarter. What is your recommendation to the company based on a PW analysis? Project Initial Payment Monthly Costs (Today) A $1,500,000 $170,000 B $245,000 $200,000 C $300,000 $150,000 Payments are inflows for the design firm. Costs are outflows for the design firm. Payment at month 12 of $1,000,000 Costs at month 9 of $100,000 None Final Payment (At end of project) $3,000,000 Project Length Other Cash flows 2 years $3,000,000 18 months $4,000,000 30 monthsarrow_forwardProblem 03.056 Shifted Decreasing Gradients The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 4 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 25 years, what is the present worth of the desalting option revenue at an interest rate of 6% per year? The present worth of the desalting option revenue at an interest rate of 6% per year is determined to be $arrow_forward
- You are weighing the economics of installing a triple-glazed energy efficient window system in your building. The following life cycle costs and savings are provided. The study period is 25 years, and the discount rate is 10%. Is this an economically viable approach based on the Savings-to-Investment Ratio (SIR)? Triple- Glazed Energy Efficient Windows: Window Quantity takeoff: 10000 sf Initial Cost: $100/sf Annual Operating Costs: $2.5/sf Annual Energy Saving: $10/sfarrow_forwardYou are considering an investment project with the financial information provided below. Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern? The break-even value of unit price is ?arrow_forwardThe following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Buildings and equipment, net Accounts payable Common shares Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June $50,000 $60,000 $72,000 $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 July $90,000 $48,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows:…arrow_forward
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