An Army Corps of Engineers project for improving navigation on the Ohio River will have an initial cost of $6,500,000 and annual maintenance of $130,000. Benefits for barges and paddle wheel touring boats are estimated at $820,000 per year. The project is assumed to be permanent and the discount rate is 8% per year. Determine if the Corps should proceed with the project.

An Army Corps of Engineers project for improving navigation on the Ohio River will have an initial cost of $6,500,000 and annual maintenance of $130,000. Benefits for barges and paddle wheel touring boats are estimated at $820,000 per year. The project is assumed to be permanent and the discount rate is 8% per year. Determine if the Corps should proceed with the project.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 9E

See similar textbooks

Similar questions

Calculate the B/C ratio (modified) of a building that houses students during their classroom discussion. Theaccommodation equates to P525,000 annually. However, the annual maintenance is P135,000. Its constructioncosts for about 2.3 M. If sold 20 years from its first operating year, it will amount to P250,000. Take MARR = 15% Please solve using economics formula.
A state is planning to construct a stretch of highway extending to 60 Kilometer. The state signed a contract based on the BOT option (Build, Operate, and Transfer) with a construction company. The construction company will finish the project in two years (30 kilometers per year), after which it will operate the highway for 25 years. The company generates revenues by collecting a flat fees from the cars using the highway. The following information is available: Cost/Kilometer: 1,000,000 S Number of cars using the highway: 500,000 car for the first year of usage, then increase by 5% a year. - Annual operation cost: 100,000 $ for the first year of usage, then increase by 10,000 $ every year. The company's MARR is 8% per year. Calculate the value of the fee charged/car so that the Net Present worth of the project is 25,000,000 S.
The bookstore at Tech purchases jackets emblazoned with the school name and logo from a vendor. The vendor sells the jackets to the store for $38 apiece. The cost to the bookstore for placing an order is $120, and the annual carrying cost is 25% of the cost of a jacket. The bookstore manager estimates that 1700 jackets will be sold during the year. The vendor has offered the bookstore the following volume discount schedule: Order Size 1–299 Discount 0% 300–499 2% 500–799 4% 800+ 5%
A local government is considering promoting to urism in the city. It will cost$8,000 to develop a plan. The anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, rest room. $50,000patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
A community public works project will cost $92,000 and will benefit five different individuals. Individual Individual Benefit ($) Individual Cost ($) 1 4,500 6,000 2 18,500 15,000 3 19,000 17,000 4 30,000 24,000 5 29,000 30,000 Does this project meet the Pareto efficiency improvement criterion? If possible, revise the cost shares to allow the project to meet the Pareto criterion and to pass a referendum. please use excel with formulas
A company obtains an annual revenue of R300 000. The annual cost of goods sold is R120 000. The expenses are made up as follows: Salaries= R50 000 Telephone and internet services = R8 000 Water and lights = R10 000 Stationery = R5 000 Bank charges = R500 Compile a budget for this company showing the Gross profit and Net profit both in Rands and as a percentage value.
The cost of a health care project is $5000 per year. The project will start immediately and will run for a total of eight years. Somebody tells you that the total cost of the project is approx. $37360. This person time discounted using a rate of 1% per year time discounted using a rate of 2% per year time discounted using a rate of 3% per year time discounted using a rate of 4% per year
5,6,7 search Saved Help S GE
The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. What would the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 4% per year. E Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. The life of the project needs to be at least years in order to be cost-beneficial to the city. (Round up to the nearest whole number.)
Which of the following would be an advantage of using a Project Management software application (select all that apply): Learning curve Accuracy Speed False sense of security Ability to handle more complex projects What-if analysis
In a certain city the promotion of tourism in the city is being considered. It will cost $6,000 to develop the plan. The anticipated annual benefits and costs are as follows: • Annual benefits: Increased local revenue and tax collection $117,400 • Annual support service: expansion of parking lots, restrooms, surveillance and street repairs $48,830 If the city government uses a discount rate of 10% and a study period of 5 years, this tourism project is justifiable according to cost-benefit analysis?
The University Eye Institute in upper New-York state is a state-of-the-art ophthalmology center that specializes in a sophisticated laser surgery to correct myopia. Current annual volume is 1000 operations. A major customer of the center is the United Health Insurance system. United currently sends the University Eye Institute 200 patients per year or 20% of the total. United pays $2,500 per operation as does every payor. The United Health Insurance Company is satisfied with the quality and service provided by the University Eye Institute and has proposed that they send the Center an additional 100 patients (operations) per year. United proposes that the fee be reduced to $2,000 for the additional 100 patients and for the prior 200 patients. Assume the fee paid by payors other than United Health remains the same. a) What is the marginal revenue per patient if the proposal is accepted? b) What is the marginal cost per patient if the proposal is accepted? Here are some cost data to…