Answered: Concept VP of benefits, $ VA of no…

Concept VP of benefits, $ VA of no benefits, $ Initial cost, $ Operation cost and mantenaince by year $ Life of the proyect in years Efective flush 3800,000 45,000 2200,000 300,000 15

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Calculate the conventional B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Item Estimate PW of Benefits, $ AW of Disbenefits, $/year PW Cost, $ Life, Years 4,150,000 45,000 1,325,000 20
Davao International Airport has crafted estimates for the upgradıng of security systems. Will the upgrade be accepted? Determine the B/C ratio at an interest rate of 10% per year using the conventional Annual Worth method of the following: a. Benefits are reduced by disbenefits b. Costs are increased by disbenefits Cashflow Amount First costs $13,000,000 $3,800,000 $6,750,000 $400,000 Annual worth of benefits Future Worth of disbenefits Annual operating and Maintenance costs Life 20 years
The estimated annual cash flows for a proposed municipal government project are costs of $750,000 per year, benefits of $950,000 per year, and disbenefits of $200,000 per year. Calculate the conventional B/C ratio at an interest rate of 10% per year, and determine if it is economically justified. The B/C ratio is The project is economically justified
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. Create a new spreadsheet in which total fixed cost increases to $5,000. What price should the manager charge? How many papers should be sold in the short run?
a. Based on PW method, Design Z is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is (Round to two decimal places) (Round to two decimal places) c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Z is more economical d. The discounted payback period of Design Y is The discounted payback period of Design Z is years (Round to one decimal place) years (Round to one decimal place) Investment cost Annual revenue Annual cost Useful life Salvage value Net PW Therefore, based on the payback period method, Design y would be preferred. (e) Why could the recommendations based on the payback period method be different from the other two methods? ⒸA. because the payback period method ignores the cash flows after the payback period O B. because the payback period gives more weight to the cash flows after the payback period C Design Y Design Z $140,000 $275,000 $57,659 $96.354 $17.618 $31,687 15…
1)what is the best project based on simple payback 2) What is the best project based on discounted payback 3)What is beta B/C ratio 4) What is gammas B/C ratio
Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 85 years, and the sponsoring agency's MARR is 9% 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. Initial cost Annual benefits B-C ratio The best jogging track is alternative A $52,000 $7,500 1.60 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative A с B D B $62,000 $10,500 1.88 C… Alternative Inc. B-C ratio 1.60 C $57,000 $9,000 1.75 D $150,000 $19,000 1.41 Is the alternative acceptable? Yes Yes Yes Yes
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. Two firms, Small and Large, compete by price. Each can choose either a low price or a high price. The following payoff table shows the profit (in thousands of dollars) each firm would earn in each of the four possible decision situations: a) Is there a dominant strategy for…
The National Environmental Protection Agency has established that 2.5% of the median household income is a reasonable amount to pay for safe drinking water. For a median household income of $45,000 per year, what would the health benefits have to be (in dollars per household per year) for the B/C ratio to be equal to 1.5?
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. What is the total fixed cost for the El Dorado Star? Explain how you arrived at this conclusion.
The city of Valley View, California, is considering various proposals regarding the disposal of used tires. All proposals involve shredding, but the benefits differ in each plan. An incremental B/C analysis was initiated, but the engineer conducting the study left recently. Using a 20 year study period and an interest rate of 8% per year, a. Fill in the blanks in the incremental B/C columns of the table below b. Which alternative should be selected? Alternative P Q R S PW of Cost $ Million 10 40 50 80 B/C Ratio 1.1 2.4 1.4 1.8 AB/C Ratio (when compared with Alternative) P R Q 2.83 2.83 S
The B/C ratio for a flood control project along the Swanee River was calculated to be 1.1. If the benefits were $610,000 per year and the maintenance costs were $221,000 per year, determine the initial cost of the project at an interest rate of 11% per year and a 50- year life. The initial cost of the project is $